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How to manage personal finance during COVID-19 second wave?

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The COVID-19 pandemic and its effects have been around for over a year now, and have brought in a lot of uncertainty.

How to manage personal finance during COVID-19 second wave?
The COVID-19 pandemic and its effects have been around for over a year now, and have brought in a lot of uncertainty. It has not just taken a toll on the physical and mental health of the masses but has also shaken the financial backbone of several households.
Hence, let’s address some of the concerns clouding personal finance and the healthier ways to cope with them:
Availability of the emergency fund
According to Pranjal Kamra, Founder and CEO of Finology, the present crisis has highlighted the importance of maintaining an emergency fund that will help individuals to sustain at least a few months in case there is any cash crunch.
Through access to emergency lines of credit, Anil Pinapala, Founder and CEO of Vivifi India Finance believes that everyone should have 2-3 months of their monthly salary available to tide through either income impacting events like job loss or pay cuts or unexpected expenses like hospitalization when every essential medical item seems to be in short supply and spurious elements are trying to take advantage of the same.
Need versus need
During any emergency, Prithvi Chandrasekhar, President, Risk and Analytics, of InCred says that there is a significant clash between requirements and needs. So, he thinks that it is consistently vital to spend more on necessities and control one's spending on trivial items.
“If an individual wants to upgrade to a new car but doesn’t necessarily need to, they should defer that decision to another time. They are not likely to use it anyway, and that way they won’t have to deal with more EMIs,” states Ankur Maheshwari, Chief Financial Officer of MoneyTap.
Re-evaluation of health insurance
With the pandemic continuing to spread, Maheshwari of MoneyTap states that it is crucial to have the right insurance coverage.
“Life and health insurance should not be perceived as merely another investment vehicle but truly an “insurance” for some unexpected events,” he opines.
No fear-based decisions
As per Maheshwari, this is a very important part of planning.
“Fear begets impulsiveness and one may end up investing in things that are not useful in the long run, just because a whole lot of people are stocking up on it. So, it’s better to be prudent, and spend on what the imminent needs are,” he affirms.
Building and maintaining a good credit score
While many may not focus on this aspect, building and maintaining a good credit score is the need of the hour, suggests Maheshwari.
When most financial institutions and banks tighten their offers for credit during the pandemic, he believes that the super-prime alone have access to pre-approved loans or got credit when they urgently needed it.
Investing for long term
Kamra of Finology suggests individuals to go for long-term investments in shares or equities as they can get more units when markets are down for the same amount and gain returns in the long run.
The decision to purchase immovable assets
Given the current situation, Anjali Agarwal, HR Head, PC Financial this that it is important to decide whether to purchase immovable assets due to low-interest rates or not.
“The decisions should be taken after considering both the short-term and long-term impact of the pandemic,” she states.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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