Monitor your expenses….
It is essential to monitor your daily expenses carefully to
understand your cash flow. The pandemic has made us rethink on our priorities.
Begin by making a list of expenses that separately
lists your discretionary expenses
from fixed expenses.
Try to trim on non-essential recurring expenses. Understanding your expenses and how cutting it down can add up to your savings could help you build a stronger corpus for Emergency Fund, that holds up to 12 to 24 months of expenses including loan EMIs. You must initiate saving from your income first and then look at spending from the remaining balance.
Build up an emergency savings pot….
Another important way to Covid-proof your finances is to build up an emergency savings pot of cash – if you can. You will then have this to run your routine life, in case you lose your job, face an income cut, or have to deal with unexpected costs.
It’s a good idea, where possible, to build up between Six months to One year worth of outgoings. Keep this fund while summing up your liabilities on EMIs, Credit Card payments, rent, mobile bills, essential groceries etc. This money should be available immediately, so put it in an easy-access liquid account rather than one, where access to the money is restricted.
Writing a WILL is vital….
It also pays to make sure you have an uptodate will. If you die without one, known as dying intestate, your assets will be shared out according to applicable law, rather than according to your own wishes for your loved ones.
It is generally best to use a CA or Lawyer to help you write a tax-efficient will and meet your family’s specific needs, but if your will is simple, you could use a will template and put your wordings.
Focus on paying off debt….
Market financial research shows that 8 out of 10 people, have spent less money during lockdown, by not being able to spend on holidays, dining out or luxury shopping. Of those, 28% said, they would use the extra cash available to pay off credit card debt.
If you have multiple debts, an easy way to clear them more quickly is to put any spare money towards the debt with the highest interest rate first. Once that debt has been paid off, you can move on to the next highest interest rate, and so on. For those who don’t have any spare cash to throw at their debts, consider moving existing credit card debt, to a zero balance transfer credit cards this will give you a break from paying interest for a number of months.
Note that there will be a transfer fee to pay (often around 3% of the balance) and you’ll need to try and clear your balance before the period ends and interest is charged. You’ll also need a good credit score to be accepted for the best deals. Alternatively, you could look into consolidating your debt with a personal loan, at a cheaper rate of interest – again, the deal you’re offered will depend on your credit score. If you’re successful, you’ll be able to combine your debts into one monthly payment with one lender and, if the loan has a lower interest rate, save yourself a decent sum of money at the same time.
Protect your family thru Insurance….
Whether you are married, have children or other dependants, it’s important to ensure they would kept living good life, even if you become ill and had to stop working or if you died. Having life insurance in place will ensure your dependants receive a lump sum to help them pay bills and other costs if you die within the term of the policy. You can use a comparison site to get an idea of how much premiums will cost you each month – typically, the younger you are, the less you’ll pay.
To be continued……..Written in public interest, to keep people finances remain COVID-proof, Author has tried to summarise his 22 years of experience of Financial Investment & Wealth Advisory.Birla WP Management
read my blogs : www.YogeshBirlaCA.Blogspot.com
