Manage Your Finances During Emergencies.

As you take stock of your finances and stack up the losses due to the COVID-19 pandemic, ask yourself what could have kept your finances in good shape? Here are a few steps that can manage your finances against such emergencies.

Expect the unexpected

We all know that we should always keep emergency cash available for a rainy day since childhood. By doing so we don’t have to borrow money from others or defer EMI which might be due during COVID-19 lock-down. For that, we should always make savings by investing in Liquid Funds or Bank Fixed Deposits so that in case of emergency, we can get Overdraft facility or withdraw from Liquid funds to meet expenses.

Borrow and spend wisely

If you are not willing to break your FD or sell your funds, you can opt for Personal Loans from Banks which they provide by charging nominal interest rates. But you should plan how to use that money. Don’t spend on unnecessary items and spend only on essentials. That way you can save money for more period of time as lock-down may get extended. So you should plan for minimum 5-6 months and spend accordingly.

Keep credit history intact

The importance of a good credit history cannot be stressed enough. During an emergency, you might be forced to take a loan. This would be a cakewalk if you have been a good borrower with an unblemished record. Even if you have lost your job, a good credit history can get you a loan.  Bad Credit history will make it very difficult to get loans during emergencies.

Don’t risk money you need very soon

As you might be checking stock prices crashing and available at cheap rate which will tempt you to go for it, but it is better to stay away from risky investments such as stocks and commodities. Due to uncertain times no one can predict which way the market will be moving. So if you have cash available then also it is necessary to go for Bank FDs as you are certain about returns on those. By investing in stocks your funds might stuck for longer period as market crashes like cards but recovers like tortoise. It will take months or years to recover your principal amount forget about profit. But if you are really interested in risky assets, go for SIP plans, buy in small quantities to average.

Maintain Balanced Portfolio.

You should maintain balanced portfolio by investing in various assets such as Stocks, Mutual Funds, Bank FDs, Post Office Deposits, PPF, etc to stay protected from erosion of Capital.


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