The magnitude of COVID 19 impact on humanity is unlike any other global crisis or phenomenon experienced in the recent past. The socio-economic impact is expected to have deep consequences beyond just the spread of the disease. Tightening of the economy, grinding halt to commercial activities, supply chain disruptions and shift in consumer buying behaviour are some of the immediate offshoots from the global pandemic. Add to this the job losses and unforeseen medical expenses can put a dent into an individual’s financial portfolio.
However, the stress behind such circumstances can be prevented through financial fitness. Following some financial fitness mantras can help you to move forward in a secured way, towards the unprecedented future.
Here are five tips that will allow you to be aware of your current financial position and plan accordingly
1. Keep Track Of Monthly Expenses
Penning your monthly income and expenditure allows you to be more aware of your spending habits. It is the most essential activity to meet your financial priorities and stick to your budget plan.
2. Maintain A Healthy Credit History
One of the most important factors that help decide your eligibility for a loan is your credit score. This depends on your credit history, a record of your previous borrowings (if any), and your repayment record. Taking care of existing loans and repaying them on time helps to have a high credit score which makes it easier to get loans approved, and generally a credit score of 750 and above is considered great.
3. Create An Emergency Fund
In the current pandemic situation, it is more important to have contingency funds to overcome financial hardships. Such emergency savings can be helpful to tackle crises like job losses or medical emergencies, etc. It is advisable to save about 3 to 6 months of basic expenses as an emergency fund.
4. Take Health Insurance
It is very important to have health insurance cover to mitigate any unforeseen health issues, especially to feel safe and tide over the tough times. If your health insurance policy is well-planned beforehand it can cover most of the expenses like hospitalization charges, doctor consultation fees, medical tests, etc. which will lessen your stress in case of any medical emergencies.
5. Start Saving In Small Amounts Every Month
Apart from the emergency fund, you should also make sure you set aside a small amount (based on your earnings) in anticipation of future needs. It could be in the form of mutual funds, SIP or recurring deposits. You can also create auto-transfers directly to your savings account to ensure your savings continue to grow without much effort.
Being financially fit is all about understanding and applying the best practices in saving and investing, which will further help you to mitigate any potential problems related to money. Financial fit people are generally more known to be secured and independent in financial crisis times.
The author is the Chief Business Officer at EarlySalary
