How to Manage Your Expenses during Lockdown without Stopping Your EMI Repayment?The Covid-19 pandemic still prevails in 2021 all over India with the second wave experienced in full swing. This has led to lockdowns again being imposed in several Indian states to break the chain. Many salaried individuals had to face salary deductions or job losses due to the commercial losses experienced by many companies. The ongoing 2nd wave has brought back the fear and uncertainty in the minds of people, as to how to manage their finances. It is therefore even more important now, that one focuses on increasing their savings and reducing the expenses more than ever before, till this crisis gets under control.
Needless to say, financial discipline forms an integral aspect of everyone’s life, otherwise, situations like the current crisis would throw their life in jeopardy.
Most people have EMIs to pay, the non-payment of which leads to penalties and reduces the credit score, impacting potential loan approval by lenders.
So, what should one do under such circumstances? Making certain changes in financial planning can help in the management of daily expenses during the lockdown and the situation of delaying EMI payments won’t arise.
Tactics to help you manage your expenses, including EMIs during lockdown
Maintain Emergency FundThe ongoing crisis has shown the importance of saving for a rainy day. It is therefore prudent to maintain an emergency fund to ensure you have some form of liquid cash to manage uncertain situations. You should start by regularly setting aside some amount as savings. This will not only help you to collect some lumpsum money but also manage the financial constraints during an emergency like EMI repayments, medical expenses, utility bills, etc.
Adequate InsuranceEnsure that you have adequate health insurance and term insurance cover to meet any unforeseen crisis like lockdown. Keep a check on your health insurance coverage during any illness. If required, opt for increasing the premium amount to increase the coverage as this may help you in case of any hospitalisation or medical emergencies.
Consolidate DebtAnother practical way to manage debts and lower your expenses would be to consolidate your multiple debts into a single loan. If you have maintained a good credit score, then lenders may even give you the benefit of a lower interest rate or longer tenure for such a consolidated loan, lowering your EMIs over the tenure of such a debt consolidated loan.
Go for EMI moratoriumIf you have an ongoing loan and it qualifies for an EMI holiday, then consider going for it. This will give you more time to manage your financial constraints and defer EMI payments without any penalty being charged.
Revisit your exiting Investment PortfolioIf you have invested in stocks, mutual funds, etc. then have a look at their existing value. When such investments are not performing well, then it is advisable to sell them and invest in good funds for a long-term benefit. If you have good investments, keep investing in them through the SIP route, because you can get more units in the future.
Curtail Non-essential BuyingRestrict your spending on non-essential items during the lockdown. This will help you to curtail your expenses, increase savings to spend on essential items like food, medicines, etc.
The uncertainty brought by Covid-19 induced lockdown that led to financial constraints for many. By making certain changes in financial habits as seen above, one can manage to tide over such uncertainty with success.