Who thought that a virus spread would go worldwide before any of us could have comprehended its implications? It all began in India on the 15th of March with an overnight scenario for a lockdown. Soon people settled in with the whole new routine and managing work from the comforts of their houses.
While some rose to the occasion and found new breakthroughs in these trying times, others were met with harder situations to deal with. Emergencies are never planned, and situations like the Covid-19 lockdown call for financial reinforcements to maintain a comfortable life.
But what counts as a financial emergency?
- Loss of job: Loss of a job is a subset of many events that can affect a company, city, country or even the world. Life is built on several regular and irregular expenses which we manage without income. But how will someone sustain themselves and their families in times where the monthly income itself is missing?
- Health crisis: We often come across situations where a person is absolutely fine one day and the next day they’re hit with a health issue that no one saw coming. No one wants to prepare for when they fall sick but the fact is that getting good health services requires good insurance policies and a generous emergency fund kept aside. Hospitalization costs a fortune these days at any level.
- Major repairs: You might have to repair your solar panels or get your car repaired after months of staying parked in a corner. These expenses can come as a shocker most of the time.
- Pandemic: The onset of the Covid-19 pandemic from March 2020 is a great example. It is a factor that initiated job losses and health crises in many households. Being prepared to handle such an emergency has proven to be of paramount importance.
Related Reads: 5 goals to help your finances in 2020
Living in such an uncertain establishment, it always pays to have a contingency plan set aside for such situations alone. It is very important to be prepared to tackle such a financial blow rather than get hit when you least expect it and spend valuable time panicking and jolting yourself out of the shock.
Let’s see how you can plan your finances in an emergency which was definitely unforeseen:
- It is natural to assume that the first way out is to break all your savings and begin tackling your financial emergencies. But hold your horses! Before you set off, evaluate the situation and plan your move ahead. Don’t break the bank in panic, or apply for loans without considering your future income.
- When you start evaluating your situation, the first and foremost thing to do is to take stock of all your existing expenses. Considering the lockdown, you would need more to manage essentials than to commute and shop for leisure. So, set aside the money you need and start planning other financial obligations you have each month. Find out means to tackle the ongoing loan EMIs and credit card dues in addition to the regular bills and expenses. Despite being hit by a financial crisis, you have to ensure that your credit score does not feel the impact. Keep an eye on it with a credit bureau in India such as ours.
- If you can manage your loan EMIs and credit card dues in line with your other monthly payments, then that is good planning. However, if those expenses don’t fall within the money you have in hand, try to negotiate the terms of loan repayment with your bank. During the COVID-19 pandemic, banks have offered a moratorium for several loans, you can check if you fall in any such categories.
- Once you take care of these, unblock your emergency funds and see how much you will need in the following months. Divide it after thorough consideration and take into account the worst-case scenario. See how much money you will need to take out now and when would you plan to make the next withdrawal.
- Evaluate your investments and see the best places to find some money. You could have invested in fixed returns as well as stock market instruments. Take it all into account and see withdrawing from which instrument would be the best option based on the returns you get and the profits you have incurred.
Tough times are unavoidable, but they are not impossible to tackle. If you approach the problems with patience and a planned framework, you will be able to pave the way for yourself and your family in no time.
From CRIF, we wish you all the best and are always with you!