How To Manage Household Finances Better In The Middle Of A Pandemic
Money otherwise spent on commuting, at restaurants, theatres, and malls is being saved and all our household habits have seen a sea change in the past few months.
COVID-19 has spread across the globe and claimed thousands of lives. Uncertainty in markets, declining economies and rising unemployment are pretty much the order of the day. It's impossible to be prepared for a scenario of this sort, to be honest.
Stock markets have tumbled more than they did during the Great Recession and stocks across industries have fallen, making equity investors lose money. Lakhs of businesses have been closed due to a lack of workers and loss of demand.
But there's a plus side too. All our household habits have seen a sea change in the past few months. Money otherwise spent on commuting, at restaurants, theatres, and malls is being saved. With fewer opportunities to splurge on what our definition of ¡®essentials¡¯ has been, many of us are exploring and redefining needs that suffice. All of this has quite obviously shifted the focus on the future.
To tide over these difficult times it's important to follow a few steps to manage your money sensibly:
1. An emergency fund can be your hero
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Considering the present circumstances, it¡¯s best to avoid unnecessary expenses and take hold of your finances. The pandemic calls for an altered approach to your daily household money tackling methods, one that can weather the worst storm. Keep a close track of all credit card, cash and debit card purchases.
2. Create a saving plan that won't fail you
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According to reports, mutual fund investors these days are topping up their systematic investment plans (SIPs), to participate in equity opportunities as the economy grapples with the impact of the COVID-19 pandemic. The top-up facility is one efficient way to keep your savings growing in line with your income.
Employ the "50/30/20 rule" for spending and saving. 50% of your salary should go toward things that you need, like food, rent, education, 30% on things that you want to stay sane, online shopping (because that's the only safe option during a pandemic), and 20% allocated to safe investments, like mutual funds that can be used as back up for unprecedented times.
Also Read: These Apps Can Help You Save, Make And Invest Money!
3. Re-think that loan
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Amid the ongoing crisis, taking a loan to pay off another sounds especially tricky. Stabilise your household income first before making any big money moves. If the financial input is low, loans may end up being an additional burden. It's best to look at avenues to borrow only if there's an opportunity for positive financial growth or appreciation.
Also Read: Here Are Some Things You Need To Consider When Applying For A Car Loan
4. Invest in cost-effective options
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Change all lightbulbs to cost-saving LED or CFL ones. Take all electronics like TVs, ACs, Laptops etc. out of standby mode, as this could raise your monthly electrical bills. Constantly look for more such little ways to save money and it will make a massive difference.
Households need to re-evaluate their budgets and sort expenses as per relevance and demarcate between necessary and luxury items under these unforeseen circumstances.
5. Switch to a minimalistic approach in life
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Clear home stuff you haven¡¯t used in the last year. Please do not hoard things in the hopes that you will use them ¡°someday¡±. Sell these second-hand goods on platforms like Olx or Quikr. Develop a frugal mindset in all things and identify ways you can save money. Stop hoarding and overspending on groceries. While it is wise to avoid supermarkets and crowded places, buying supplies for just a month should suffice.
Also read: 8 Ways The Indian Millennial Can Manage Money Better
6. The best time to 'conserve and reuse'
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In the pre-COVID-19 world, people turned to pros because they were busy and pressured. But more time at home means less of an excuse to avoid learning to cook, clean, conserve and reuse. This way, not only are you giving the environment a break, you're also cutting down on useless expenditure. There are plenty of DIY videos online that help you create stuff you'd love to use from things you weren't using all this while.
Facebook illustration: Ranak Mann
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