Take these steps to become financially secure in COVID-19 pandemic
Novel Coronavirus COVID-19 pandemic has hit the global economy hard. It has affected the stock market and several businesses are shutting down due to the aftershock of lockdown. At this point in time, nobody can predict how long the recession will last.
Amid uncertain times, there is no job security as the income of businesses have taken a hit. Several employers have also asked employees to take hefty pay cuts. What to do in such troubled times? How to keep your financial health sane?
Here are a few steps that you can take right now to become financially secure in the COVID-19 pandemic.
#1 Create an Emergency Fund
In these turbulent times, you don’t know the future of your income/ job. Creating an emergency fund is a great way to hedge your expenses in the event of a job loss or pay cut. Start accumulating funds for at least 6 months.
So, for instance, if your monthly household expenses including rent, groceries, electricity, and other errands are pegged at 40,000 per month then you should aim for building a corpus of 2,40,000. Now, it might look a big amount to save.
We have got a plan to help you create an emergency fund at a faster pace.
Due to lockdown, we have stopped dining out, our house helps for cooking food, cleaning the house, and doing dishes are not coming. We are not spending on movie outings, weekend trips and much-awaited foreign holidays are a distant dream at this point in time.
If you are also working from home then you are also saving the money that you would have spent on commuting to the office. And in the absence of chai-sutta breaks and not eating your lunch in the office canteen; just imagine the amount of money you are saving.
The money saved by a normal household under these circumstances could be anywhere between 20,000 to 25,000. Instead of splurging this money on unnecessary expenses, you can route these funds along with some other amount of money into a monthly recurring deposit (RD).
For example, if you start saving 30,000 per month in the RD, you can achieve your goal in just 8 months. No big deal! All you need is a bit of discipline and commitment.
#2 Create an Alternate Income Stream
Apart from your 9 to 5 job, building an alternate income stream that will help you save more. And in case of job loss, you would be able to manage your expenses in a better way. You can start an online business to sell anything that you may think will help you make a profit.
You can also look online for freelance work. There are several websites including Fiverr, UpWork, and WorknHire where you can find loads of freelance work for consulting, data entry, web development, graphic designing, content writing, digital marketing, and customer support among others. You can freelance after your office hours and during the weekend to utilize your free time and make some extra money.
Take baby steps in creating an alternate income stream. For example, first set a target of earning an amount that could meet your grocery expenses or pay up your electricity bill. Gradually push the envelope and God knows, your side work might become your full-time job in the long run.
#3 Sell your Second Car
Our commute has just got limited to delivering essential services or buying groceries. The scare of coronavirus is going to keep us locked in homes for a foreseeable future. If you and your partner are working from home all day and are going out only to buy essential items; then it doesn’t make sense to have 2 cars in the house.
The car which is not running on roads will only gather rust, its battery will degrade over the period of time, and lose its value out of no reason. You will just be paying hefty maintenance bills for a thing that you are not even using. Sell off your older car and save the money for your future goals.
#4 Stop Hoarding
Take a deeper look into your storeroom and cupboards. You will find items like old smartphones, the jeans that you can’t fit in anymore, old speakers, gifts that you will never use, or laptops. Sell these things on Olx and if you can’t sell, donate them to the people in need.
Either way, you will help a few people and also make some money out of it.
#5 Buy Unbranded Stuff
In these troubled times, local sellers and manufacturers need your money more than ever. Consider buying groceries and vegetables from your local store. Yes, they do home delivery.
Instead of buying a branded pair of shorts, you can buy clothes from a local manufacturer. Who is judging you in this pandemic anyway?
A little empathy for others will go a long way in fighting coronavirus together. And yes, unbranded stuff comes at a bargain. So, you will be able to save anywhere between 10 to 40 percent on your bills.
#6 Analyze your Subscription Plans
There is no need to have a Gym or club membership amid the COVID-19 pandemic. Also, do not renew your favorite 5-star hotel’s membership as you will not be visiting them any sooner. Also, check out your TV and OTT subscriptions. Try sharing Netflix, Amazon Prime, and other video streaming services’ accounts with friends and family to save some extra money.
If you have WiFi at home then there is no need to have a mobile phone plan with a large amount of internet data. Go for the minimal plan that would just allow you to make calls and send SMS. for all your data needs you can use the WiFi.
#7 Invest in Mutual Funds
Ace investor Warren Buffet once said that the best time to buy is when the markets are down. Markets have crashed and from here, recovery is the only hope. In the present scenario, you can buy more stock units with the same amount than you would have bought while the market was doing good.
The equity market is going to stay volatile for the coming months. Due to uncertainty and fear psychosis, the majority of people are selling stocks and as a result, valuations of good funds are coming down. If you have funds that you don’t need for monthly living expenses, then you can invest in good quality mutual funds to get handsome returns in the long term.
We hope all the above-mentioned ideas will help you become more financially stable and secure in the long run. Do you have any more ideas? Let us know in the comments below.