5 Personal Finance Concerns In the Uncertain Times Of COVID-19 And Lockdown This is the time when we can focus on our fundamentals and growth strategies
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Given the economic uncertainties caused by COVID-19 and the extended lockdown, financial worries have increased. During these uncertain times, it is very important to assess the current financial situation and gauge the long-term impact on our personal finance. Often, a few small steps can help you stay ahead.
Here are some common areas for financial concerns that may come up.
Late or missed payments
Late payments are one of the major financial concerns among individuals. You can always look for better ways to simplify the financial responsibilities. To avoid late payment charges, you can opt for an auto-pay method. If you do not have enough money in your account to auto-pay your EMIs, call your bank/lender and renegotiate the terms of payment and increase the tenure of your loan.
Need vs want
During any crisis, there is a big conflict between needs and wants. It is always advisable to spend more on necessities and control one's spending on non-essentials. The best way to solve this is to evaluate what is extremely important to buy and cut off spending on luxury items and unused subscriptions or memberships. Maintain a strict budget and use an expense tracker app to keep your overall spending in check.
During a crisis as a result of individual or household consumption personal debts are increasing. Credit card debts, auto loans, home loans and student loans, among others, have huge interest rates and over the days it becomes difficult to repay them. Many financial institutions are authorized to take legal actions for debt recoveries. Many individuals do not want to be a prey of legal actions.
Lack of adequate emergency funds
It's prudent financial advice to accumulate an emergency fund that can last for long and benefit during any crisis. It depends on the financial obligations of each individual. Managing the budget is not an easy task and if done properly one can eliminate debt cycles. It is important to identify what needs the most attention and accordingly figure out the plan of action.
Cash flow issues
Outstanding payments are one of the biggest challenges. Cash flow is extremely important for any individual. Any shortage in cash flow leads to the failure of monthly budgets and becomes a major concern. The absence of a predictable paycheck is an issue.
The impact of financial problems can be countless. It can lead to mental and physical imbalances. While worrying will not help much, having a robust plan to manage financial challenges can ease some of the stress.
Here are a few ways in which an individual can address the growing financial concerns during the COVID crisis.
Do a thorough check of your income sources and expenses
Budgeting is key. Try and cut out expenditure in areas such as subscriptions, ordering food and household services. Tighten the belt so you have more funds at your disposal for emergencies. Check if you can pick up freelance assignments over the weekends and earn a little extra.
Prioritize and think twice about your financial goals
Amidst the lockdown, it is important to look at some of the financial goals and priorities. The business activities are likely to get affected and you may have to break your funds for emergency needs.
Do not speculate and make abrupt decisions
There will be a substantial impact since the entire economy has come to a halt. Several related regulations will have both short- and long-term implications. Market conditions are going to be volatile. One has to think rationally and be extremely careful about the next course of action.
Minimize financial obligations such as debts and extra expenses
As a rule of thumb and to combat the present situation, unnecessary expenses should be avoided. The surplus funds can help mitigate loan obligations and reduce the debt burden.
Be realistic and try to stay positive
Your financial problems can be solved with the right mindset. It is important to determine what you can reasonably achieve from your budget.
Undoubtedly, there are many challenges during this crisis. But this is the time when we can focus on our fundamentals and growth strategies. Assuming that the worst of COVID-19 doesn't impact us, we can worry about economic recovery. It will take weeks if not months for things to be rebooted. But this is not the first time we have survived a crisis. The narratives will change and transform things into normal bringing positive opportunities.