Amongst all the Coronavirus tensions, one major event which came and went by without much buzz was the financial year closing and beginning of the new financial year- FY 2021. We have entered into the new financial year from 1st April. The year may have started on a bad note for a lot of us, but planning your finances effectively can help you overcome the financial blues.
Till now the Covid-19 pandemic has led to a loss of over $ 1 trillion to the global economy. Industries and companies have been badly affected due to the shortage of labor and raw materials considering the lockdown in various countries. The financial condition of every individual has been affected as a result and the economy is in doldrums.
However, despite the lockdown, there is an increasing number of positive cases being reported every day. While the pace has reduced to some extent, it is impossible to predict as to when we will finally be able to resume our normal life. Due to this sudden shutdown of all physical commercial activity, a recession like situation has come upon us which is not only affecting business owners but is also leading to pay-cuts for the employed population.
In such a situation it is very important to plan your finances effectively so that you don’t have to face financial crisis in the future. This can be done by following various basic pointers which can help you maintain a financial balance without compromising on your lifestyle.
Stay Away From Depreciating Assets
You might be a gadget freak, who keeps on changing and upgrading their cell phones to the latest models. But as you all know all such assets including electronic gadgets, automobiles, furniture etc. depreciate in value over time, and in such a situation it is better to avoid putting your money in getting these unless it is necessary. Expenses on apparels and cosmetics can also be controlled and limited to save more.
Recover Your Contingency Fund
It is recommended to maintain a contingency fund which is equal to 3 months of your income for hard times. It is good if you have your contingency fund planned and maintained. But considering the current situation, it is necessary to increase the same for all your needs. In case you have utilized some amount of money from your contingency fund in the lockdown, you should recover it on priority once things stabilize.
Keep Your Insurance Updated
Considering the prevailing effects of the pandemic, it is very important to have a health insurance and life insurance. Also, you must check with your insurance provider whether Covid-19 is covered in your policy or not. In any unforeseen case, health insurance and life insurance can help you and your family without digging a hole in your finances. Also, the sum insured in your health insurance should be sufficient enough for the modern medical expenses.
Reallocate Your Portfolio
The financial markets across the globe have been very volatile during all these times, and there are strong chances that your investment portfolio must have experienced its after-effects. Therefore, it is very important to reallocate your investments in equities, commodities, mutual funds and others to achieve optimum balance. Reallocation of investments may help you in minimizing your risk.
Get Financial Assistance
In case you are not sure about your financial investments, it is recommended to get help from a registered investment advisor. There have been various schemes from the government like the moratorium on EMIs for 3 months which can be beneficial for you. A financial advisor can not only help you in planning your investments as per the current market conditions, but can also keep you updated about the various policies which have been introduced to help the citizens cope up with the situation.
While it is not evident, that when the world will resume its pre-pandemic pace, above mentioned strategies will surely help you in maintaining your financial health for the new financial year. But as the old saying goes - “Health is Wealth”, it is more important to physically stay safe from the threat by following social distancing, staying home and observing basic hygiene.
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