Lockdowns due to an increase in Covid-19 infection have led to widespread financial disruptions as business activities have been suspended or suspended in many organizations.
Lockdowns, which contain the boom of the Covid-19 infection, have caused widespread financial disruption as businesses in many organizations, from small and medium enterprises (MSMEs) to large corporations, have been shut down or suspended.
As a result, many people face financial hardship after losing their job or, in some cases, having their salary cut. To manage their finances during such indefinite periods, they must follow the most basic principles of financial planning.
The first step in dealing with such a situation is to create an emergency fund. The required amount should be kept in Liquid Form Cash, Savings Bank Deposit, Breakable Fixed Deposit (FD), and Liquid / Short Term Fund for a minimum of six months. That way the person can travel in times of crisis without much difficulty.
Insurance Cover: Insurance is one of the most important tools in providing financial protection against unforeseen events. Individuals should take out life insurance to ensure the protection of financially dependent family members and health insurance to protect their savings in the event of a large financial burden when hospitalized.
Credit Score: Without adequate emergency funding and/or insurance coverage, a person may need to take out a small loan. To get a loan at a low-interest rate, you need to maintain a healthy credit score. For this, the credit card arrears, etc. of the existing loans should be repaid on time. In addition to the loan, one can also opt for the credit line to ensure quick availability of cash on credit up to a certain limit.
Long-Term Loans: The current low-interest-rate system may motivate you to buy long-term assets such as cars and AC on credit, as well as real estate such as property. However, taking out a long-term loan creates an obligation to spend future income to repay the loan. If income is lost due to certain disasters like the Covid-19 Pandemic, it increases the financial distress. So, it is better to avoid unnecessary purchases on credit to reduce future financial burdens.