By Agam Gupta, is Director of Operations at Share India.
Most people find it difficult to manage, save and invest their earnings. If anything, the pandemic has once again put the spotlight on why one must plan their financial future early on.
As we switch from fear to a gradual state of restart and hopefully even recovery, the questions about family finances after Covid-19 are stark. The going is too tough for some families and easy for the fortunate. However, the recast view of income, spending, saving, and investing is tough to miss. These four pillars of household finance have changed drastically.
In the new world thus, across segments, income has vanished, reduced, or has settled at a new low. Keeping the job and hunkering down to doing it as best as possible, is the most we are looking at. This means demand for credit will have to increase sooner than later. The loan may be unsecured, or against assets that the wealthier have accumulated, but as the liquidity reserves dry up, the demand for loans will move up. Banks and NBFCs have enough liquidity at this time and should be able to provide short-term finance. Without economic activity, they cannot go too far. This is why the lack of government spending, and the lack of bold reforms that place money in the hands of people, sting.
Below are a few tips on how you can save, invest and spend better:
1. Less spending on leisure
Spending has changed dramatically too. The risk to income means that families have learned to cut back on a lot of expenses. Incurring less expense on eating out, entertainment, travel by keeping budget under control, clothes, furniture, and home décor is the new norm. Beyond grocery and utility bills, most households are postponing expenses. This is needed given risks to income.
2. Developing home comfort
People have started to give greater emphasis on home and its development. During the pandemic, the walls of our house became our office space, gym, theatre and even learning institution. Buying equipment’s became a need to adapt to the new normal.
3. Investing in Insurances
Apart from building and investing in their homes, people also started to invest in health insurance, medical insurance, etc. Pandemic taught us that how important having medical insurance can be for security if and when the time comes.
4. Quicker uptake of investment instruments
A lot of individuals were seen opening DMAT accounts during the period of lockdown hence creating a good portfolio in the time that was ‘free’. Investing in shares, mutual funds, and debentures sure is a good option that has been escalated in these times and shall continue to.
5. How to save money
This is very basic yet the most crucial life skill that everyone talks about, but the pandemic has made everyone realize the sheer importance of it. Not only for medical needs but if the situation arise one must have enough money saved in their bank account with which they can help feed their families for a sufficient amount of time. Making FDs and opening PPF account can be the easiest options for the same.