Here's what COVID-19 has taught us about planning for an emergencyDecember 16, 2020, 03:19 AM IST
This pandemic has taught us some hard financial and business lessons; we would have preferred not to have learned so harshly. Yet, even as we inch closer to reopening our economies and getting back to life as we knew it, we need to remember to learn from our past and be better prepared in case of another catastrophe.
Emergency cash & loans
Any good financial advisor will tell you to have at least a few months of cash to cover living expenses with you in case of an emergency. Those who have heeded this prudent advice have had it far easier than those who wrongly believed "it will never happen to me". While you are not expected to build this small cushion of income overnight, work towards making it a priority and creating a reserve of emergency cash funds that will last you a while. Job security is a myth that is often treated as a fact. Another great rule of thumb to follow is never to take a loan you might not be able to repay. Avoid overborrowing and try and always have a plan to help repay your loans in time irrespective of the world scenario.
Be aware of lifestyle creep.
As your income increases, it's easy to find that your list of supposed "needs" also increases alongside it. But if this global crisis has taught us anything, it is that you have little control over your fixed expenses on essentials. But one look at your credit card statement will tell you that there are several non-essential things you can easily cut back on and still live a full and happy life. Staying at home has taught us how little things like expensive entertainment habits and other purchases can add up to a lot over a month.
Get better insured to stay safe.
In a world with so much financial uncertainty, making sure our loved ones are secure and provided is a fundamental need. Since employment isn't guaranteed, relying only on employer-given insurance is not wise. Having a solution that can help us hold a financial corpus and build economic strength should be a priority. HDFC Life Sanchay Plus checks all the right boxes when it comes to being a great savings insurance plan. A non-participating, non-linked plan, it offers guaranteed returns whilst safeguarding the future of your loved ones against unforeseen events.
You have the option of systematic savings and an assured regular income to make sure your family is provided for, and your responsibilities are taken care off. With assured returns, HDFC Life Sanchay Plus plan has been designed to offer guaranteed benefits that many of us are looking for right now. This non-linked plan has minimal risk and ensures promised benefits payouts happen smoothly and effortlessly. The Life-Long Income Option is a blessing for those who are worried about having a steady income post-retirement. With all these plus tax benefits, HDFC Life Sanchay Plus is a trustworthy option to have on your side.
For more details on the plan, and to enrol, click here.
Learn to budget better
While most of us cringe at the idea of creating a budget, a reduced income, lack of jobs and crisis-induced uncertainty, having a budget in place can help you understand how to manage your funds to tide over a challenging period. Calculate how much of an emergency corpus; you will need to continue paying for all your basic amenities and over 3-6 months and begin saving towards that goal. It has never been easier to collate and dissect your data. Religiously note down all your expenses for at least a month and use that information to extrapolate your costs. Build in a small buffer for some unexpected expenses and find an app or a spreadsheet that can help you keep track.
COVID-19 has taught us that calamity can derail even the best-laid plans without notice. It has shown us how plans for various areas of our lives – from home renovations to family vacations, and retirement plans might change overnight. Yet, the good news is that if you learn from what you’re facing right now, you'll be able to crest any future downturn with more confidence and certainty.
This is a partnered post.