Cash Crunch post COVID in 2021 - Best Financial AdviceCovid-19 pandemic created a havoc not just ona global public health platform but has also resulted in severe global economic downturn. Such a disruption in the global economy had millions lose their jobs and income sources, with others taking a pay cut. Economies worldwide have gone into a recession mode, with even investors seeing their net worth being swiftly wiped off. This unprecedented global situation has led to a severe cash-crunch worldwide for individuals and organizations. Everyone needs to take extra care and precaution for safeguarding both potential health and wealth erosion from the ongoing pandemic.
To help you minimize the financial setbacks due to the ongoing crisis, some key financial advice has been listed below.
Set-up an emergency fund
The crisis has necessitated the need for having emergency funds in place, to tide over urgent medical and financial requirements. An emergency fund will help when your finances get restricted due to any pay cut, job loss or medical/family emergencies. It is advisable to keep at least an average of 6 months expenses as your emergency fund. Such a fund could be set-up through a savings account which gives higher interest or a fixed deposit to earn some interest on such funds.
Ensure cost-saving measures
Setting up an emergency fund to meet urgent financial needs is important but one also has to exercise strict cost-saving measures to help save more. The lockdown introduced cut down on certain expenses like eating out, daily commute which helped us to increase the savings to some extent. The crisis has shown the significance of curtailing non-essential spending.
Prioritize insurance protection for life and health
The ongoing crisis has shown that there is nothing that matters more than life and health in this world. So, try and get a good insurance protection which would protect you adequately for future uncertainties. Life insurance would help your family members financially in case of any unforeseen circumstances. Also, having a medical insurance plan for yourself and family helps to take care of medical emergencies and heavy hospital bills. So, if you have any ongoing insurance plan, ensure timely premium payments to avoid a policy lapse.
Continue crucial investments
The crisis may have warranted many to discontinue their long-term investment goals to offset the cash crunch and meet current emergencies. However, that does not mean that you should completely discontinue your key investment plans. Long-term investment goals are necessary to safeguard your financial future and have a secure retirement life. So, be prudent while cutting down on your long-term investment plans and discontinue those plans which do not hold higher significance in long term. For instance, if you feel that you cannot continue with your mutual fund policy due to cash crunch, then keep it on hold till your finances get more stable.
Borrow sensibly and choose a good lender
The Covid-19 crisis may have tempted many to apply for loans to overcome urgent financial needs. One should be very careful in such a situation as timely repayment of EMIs matters with loans. Otherwise, you would end up paying high interest charges, increasing the financial burden. Also, connect with a credible lender who can provide you with good interest rates and other loan terms. This would ensure that your borrowing needs are suitably taken care of.
The crisis may have altered the lives of people and disrupted economy worldwide but all is not lost. One has to learn to live with the new normal but should now be more prudent when dealing with their financial management.
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