Few personal finance points to remember as economy reopens
The economy all over the world has come to a standstill since the inception of the impact of COVID-19. This was witnessed during the month of March & April 2020. During these months, we have seen many of the countries including India, imposing a nationwide lockdown to prevent the spread of the pandemic. Though, the lockdown is still persistent to revive the economy, the governments across the globe have been declaring stimulus packages. Not just that but even in order to boost the economy, the government is being a bit lenient with their restrictions during lockdown. So, what are the things that you need to remember as the economy reopen its doors? We shall discuss it in this article.
Spending
Spending is one of the key areas that define your financial health. Unhealthy spending often leads to a lot of debt. Hence, when the economy kick-starts, don’t be in a hurry to roam around or go out on a spending spree. Rather, it is advisable that you should spend less than what you actually earn. Not just during these times but also usually, as it is a good practice to spend less than what you earn. Although, many would be automatically following it due to fear of job loss and future cash needs.
Cash
Future cash needs lead us to the next thing, i.e. cash. Here, cash means liquidity. So, try to have at least one to one and half year of liquidity and create a corpus out of it. You need to create in such a way that it will help you during temporary loss of income during such crucial times. Hence, try to avoid investing in any fancy ideas to gain more profit. Rather invest in peace of mind. This can be achieved by planning your finances well. Therefore, it is recommended to get your financial planning done from an expert.
Debt
Credit cards and personal loans are one of the easiest ways of having access to your future income. However, you should avoid using such debts unless there’s an emergency as these are high-interest debts. So, avoiding them would help you to lower your overall interest outgo in percentage terms. So, if the thing that you need to get can be deferred to any future date, then do so and save for the same. It will not just help you to reduce your cost of purchase but also, would help you to inculcate saving habit.