If anything, the COVID-19 pandemic has been a wake-up call - regarding how to live, our lifestyle and especially how we save and manage our money.?
With a number of people losing jobs and facing pay cuts, money management has never felt so important. Living on a budget is a way of life now even for millennials who usually live with a "live in the moment" attitude.?
Also Read:?How To Manage Your Finances Better During The Pandemic
This pandemic has been a teaching experience and these are the few money lessons that one should have learnt from this pandemic, you know, just for the future¡¯s sake. We need to apply these lessons because even the WHO has declared that this might not be the last pandemic.?
Here are some of the crucial financial lessons to be learnt from this pandemic so as to avoid such mistakes in the future:?
One thing that the pandemic has made us all realise is that we can all save way more than we think. We were forced to stop eating out, go shopping, partying, go to movie theatres or concerts etc. While these are the things we will want to do as things slowly go back to normal, we have had a glimpse of how much we can save if we do not indulge in them as often as we used to.?
Also Read:?A Millennials Guide To The Basics Of Stock Markets & Ways To Invest In It
I personally have realised that there is no need for going out to shop every week, one usually ends up buying and spending way more than one needs. Another thing the pandemic has forced us to do is cook at home and it's unbelievable, the amount of money we can save by not eating out.?
This habit of saving money by not going shopping or movies every week should linger.?
Also Read:?7 Tips To Keep In Mind While Buying Property Post Pandemic
The coronavirus pandemic has taught us the importance of savings. Many of us have been used to a hand to mouth lifestyle and spending money on entertainment. When the pandemic began and people started to lose their jobs, they realised they hardly had any backup money to support them. That is what exactly an emergency fund is - a backup - money for emergencies like these. In uncertain times the emergency fund can be a great financial support, for example in need of a medical emergency.?
If unfortunately, you are someone who has been laid off from your job for some reason, you can rely on your emergency fund until you get back on track.?
Save enough to have at least 5-6 months of expenses in your emergency fund, for worst-case scenarios.?
It will be a good idea to not just put your money in a savings account but somewhere that gives you better returns like Liquid Mutual Funds.
A lot of us do not get a health insurance plan as the company where we work offers it. However, during the pandemic, a lot of people lost their jobs, which means they also lost their health insurance plan. Under such circumstances, if any of your family members requires hospitalisation, it will have to go from your pocket. If you are someone who has lost their job, this would further exacerbate your financial strain.?
That is why you need your own health insurance policy, to keep you covered under such circumstances.?
So get a health insurance policy of your own even if you are covered under a corporate health policy.?
?Different asset classes perform well at different times, therefore diversifying your investments means that the risks are covered.?
An investor who has diverse investments can not only survive difficult times but could actually benefit from the situation.?
As ET Money mentions, ¡®gold prices were stagnant for a long time before they started going up last year. At the same time equities were running up when gold wasn¡¯t and then they crashed while gold delivered amazing returns¡¯.?
However, how much you want to invest in each asset should not be based on returns it is generating now but be a function of the risk you want to take. You should take guidance from an expert on the kinds of diversified investments you can/should make.
While you might be a lucky person to have not lost your job during the pandemic or faced any salary cuts but not everyone has been that lucky. However to be able to ride through such times these things can act as lifesavers - knowing how to live on a budget and not having high-interest debt.?
High-interest debt, like credit card or personal loan, is harmful to you financially even when you have a regular paycheque in your hand. The damage caused by them increases many folds if you are out of a job. Further, if you are unable to pay on time, the piling interest rate can increase the debt amount.?
It would take way longer than you planned, to get out of such a debt. So it is feasible to stay away from high-interest rate debt. Even if you are using a credit card for expenditures, spend only as much as you can pay by the next month.??
This should be a habit. Having a loose hand with money does not benefit anyone even with a regular income. Living hand to mouth does not prepare you for future emergencies,?
Living on a budget, like many of us have had to do during the pandemic, makes you realise the difference between necessities and wants. It helps demarcate what your needs are and exactly how much money can you pull through if needed.?
Job losses and severe pay cuts forced many of us to live on a budget. The idea is to foster that habit. Living on a budget is what will help you to save and keep money aside for emergency funds.?
These are not complicated points, most of us have been taught these lessons by the pandemic and the wise thing to do would be to learn from them.
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