Here are a few tips to improve your financial health amid the ongoing crisis.
The ongoing pandemic has brought the focus back to our health. But it’s not just your physical health that you need to look after at such a sensitive time. You also need to take certain steps to look after your financial health so that it can effectively tackle any future challenges arising out of this pandemic. Here are a few tips to improve your financial health amid the ongoing crisis.
1. Save more
Make good use of your declining expenses during the ongoing lockdown to boost your savings.
2. Build an emergency fund
One of the best things you can do with your savings is to build or increase the size of your emergency fund. An adequate emergency fund will protect you against any uncertainty like a sudden loss of income or a family emergency. You can also choose to park your emergency fund in a Fixed Deposit to earn interest.
3. Purchase a Life Insurance plan for an adequate sum assured
If you don’t have a Life Insurance policy, you should consider getting one with a sum assured of at least 10 times your current annual income, in order to protect the financial interests of your dependents if something untoward happens to you.
4. Get adequate medical insurance cover
Get a comprehensive Health Insurance plan for yourself and your dependent family members with a coverage amount of at least Rs. 5 lakh. This would protect your savings and investments if any of the insureds require hospitalization.
5. Don’t discontinue essential investments without thinking it through
Avoid panic-stricken investment decisions which could prove counterproductive to your financial goals. Investors would be well-advised to continue with their investments in small savings schemes like the PPF despite the recent lowering of rates. And mutual fund investors should continue with their SIPs to better absorb the impact of market volatility and fetch desired returns in the long term. When in doubt, consult your financial advisor.
6. Consider slightly increasing investments in gold
Some of you can also consider slightly increasing your gold investments – be it physical gold or dematerialized gold — to minimize the impact of market-risks.
7. Monitor your Credit Score regularly
Just like your doctor advises you to monitor your blood pressure, you should also make it a point to check your credit score from time to time. A 750+ score is an indicator of good financial health and is crucial for getting better loan offers.
8. Go contactless for all your banking requirements
And just like you’re maintaining social distancing these days, you should also go for digital banking. Doing so would hold you in good stead as contactless and presence-less banking is the future of finance.
So, keep calm, follow the government instructions, look after your health, go digital and take the steps that I discussed to fortify your finances. Take care and stay safe.