Improve your personal finance during lockdown

Henil Shah
/ Categories: Mutual Fund, MF Unlocked
Improve your personal finance during lockdown

In schools, we only learnt how to read, write and understand the basics of mathematics & science. However, financial literacy is something that finds no traces in the education system. Financial literacy is gaining knowledge in the field of finance as well as understanding the concepts of personal finance. This helps the person to manage his/her money, how to save, invest and plan for their financial future. However, most people even after their graduation have no idea how to manage their personal finances. This results in ‘paycheck to paycheck living’ despite making a good income. In the process of earning more, income-based people usually have no time to dedicate towards managing their personal finances. Now, in the current scenario of the nationwide lockdown, take this time as an opportunity to improve your personal finances. In this article, we have listed a few points that would guide you towards doing so.

 

Budget

Budget is the key to make your personal finance work in order. If budgeting is not right, there is no meaning of your personal finances. With a crippled budget, investing for your financial goal stands meaningless. Therefore, having your budget in place as well as following it in a disciplined manner is important. So, during this lockdown, revisit your budget and check whether things are going according to it. If in case you have no budget in place, then you must create a budget first, by allocating not more than 15 per cent of your income for wants.

 

Emergency fund

Every now and then, we have explained the importance of having an emergency fund in place. And those who had built it properly would not be facing any cashflow problems during this pandemic. Nevertheless, this is the perfect time to review your emergency fund and take necessary actions accordingly. If in case if you do not have an emergency fund, then, it’s of utmost importance to build it now. Try to contribute a minimal amount of your income towards your emergency fund.

 

Debt management

Many people often rely on debt excessively, which leads them to get drown in that debt later on. To avoid such a situation, it is prudent to manage your debt. In the current condition, if you have an ability to pay off your loans, then try to pre-pay the credit card debt and personal loans. Also, if your pocket permits, then try to avoid EMI moratorium. During this lockdown, make sure to sit and understand the kind of debt you owe and how much outgo is towards the credit card debt and personal loan. Keeping this in mind, your current income situation foreclose the same.

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