Authored by Mrityunjay Shahi
Coronavirus pandemic has drastically impacted India’s economic activities besides the loss of human lives. Almost all the sectors have been adversely affected as domestic demand and exports sharply plummeted with some notable exceptions where some growth was observed. While India had serious problems with unemployment and sustainable livelihoods even earlier, for several weeks the COVID crisis accentuated these problems in unprecedented ways, also leaving behind serious long-term impacts.
As companies struggled for their survival by cutting costs, many had to resort to slashing salaries and laying off staff and others had put employees on indefinite leave without pay or put freshly hired staff on hold. Not only the small companies but some big players in the industry too had to temporarily suspend or significantly reduce operations. Young startups have been impacted as funding has fallen.
Amid the hardship that you may have been facing, how should you manage your finances?
There are many ways to survive a crisis.
Following are some of such ways – Spend Less Save More
We all are trapped with numbers when it comes to managing our expenses and savings. Many of us get confused and don’t know how to make it work. On the 1st of every month, the salary gets credited to our accounts, but by the end of the month, we are invariably short of funds. At the end of the day, we don’t have anything to manage even our emergency expenses. To deal with this situation the best way is to invest in the short-term investment plans and fixed deposits of the bank, which can be turned into liquidity in the duration of 15-30 days. If you want to save a little bit of your earning every month then SIPs, recurring deposits and post-office deposits are good options.
These options can easily give the returns of 3-5 percent, so why not be a smart finance player of your own life. This is a must So that we can save a bit for rainy days in the future. On average, one person should save at least 20% of their income every month. Short-term investment plans are best to meet financial contingencies.
Invest in Long-Term Options
At the time of the pandemic, the real-estate sector was facing a crunch. There were no buyers in the market. We have seen the real-estate at the lowest. However, the psychological effect of Covid Vaccine’s arrival in India has been positive and even real estate is likely to heal. Those who have bought their properties in 2020, can hope to gain this year. As a salaried employee, one must update oneself on when, where and how to invest. For long term investment, gold and shares are also a good option.
Generate other Income sources
During the time of job loss, you can start earning from your hobbies and interests by doing freelancing work, which could be in photography, content, translation, sales and social media. Let your hobby bring you money. For example, if you love to paint then start taking painting classes at home and teach students online. These activities will surely help to combat the expenses we have these days. You can also make use of your education by taking tuitions at home for younger students.
Avoid new loans and learn how to save
Taking a fresh loan to deal with financial crunches at such critical conditions may not be a beneficial option, especially when someone is dealing with irregular income and pay cuts. This will only create a burden on the person because the future is uncertain. The only good deed that would help one in such situations is savings. Saving some part of the salary on a regular basis can create a major difference in the long run. One should be clear with their monthly expenses, insurance covers, expenditure on luxuries, and separating some part of the income for sustainable and emergency purposes.
It is crucial to stay optimistic in such times. One has to figure out the ways of cutting onto unnecessary expenses and start saving on a regular basis to avoid such financial crunches in the future. Also, investing in SIPs, fixed deposits, PPFs, can be a safer option and help one saving and multiplying their investment. Right direction and judicious approach can surely help anyone dealing with difficult situations.
Mrityunjay Shahi is Founder and CEO at SalaryDost. Views are personal