The onset of the COVID 19 pandemic has led to severe economic and health crises across the globe. As a step towards curbing the unprecedented havoc, most companies are downsizing the workforce.
Here are 3 points to remember while planning financial affairs during COVID 19 times –
Anticipate salary-cuts
Following the Covid-19 pandemic, employees across industries have been standing significant salary cuts if or lay-offs. Without any doubt, situations are uncontrollable on all levels. The rising stat of salary losses has led to reconsidering financial planning and goals. A salary-cut alters the living and spending norms of individuals which were followed for years. By adopting smart strategies, one could move over the emergency without much trouble.
Considering the current situation, one needs to be aware of a likely pay cut. The earlier you assume the better as you can start planning earlier as risk has been the factor affecting income. Many livelihoods have been washed out by the pandemic. Many are left with no employment have faced the initial wrath of the lockdown.
Manage loans efficiently
In these times, income has diminished considerably and this means that the demand for credit will increase. There is a high possibility of loans being unsecured, or against assets accumulated, but as the liquidity reserves dry up, loans will move up. However, without any economic activities for long, it is truly challenging for banks and NBFCs.
Spending pattern
The spending pattern has changed majorly. Change in income has led individuals to cut back on many expenses. Incurring no expense on eating out, entertainment, travel, clothes, is the new normal. Beyond essential commodities and utility bills, there has been not a single penny spent. For households surviving on businesses, the ability of these businesses to employ people, pay salaries, and expand activity is halted, generating a negative spiral of loss.
The indications of market behavior show a prolonged recovery for all segments. Until a vaccine or cure is found, it is advisable and wise to curb our spending only on essentials to avoid further strain on individual finance. To survive through the next few months individuals have been preparing for emergency funds by minimizing regular expenses. For now, there has been a drop in contributions to retirement funds as the focus is on rerouting resources to the emergency fund. Individuals have preferred to repay loans and have been regular with EMI payments, despite the available moratorium to evade additional trouble in the future.
