We all are locked in difficult and uncertain times of pandemic of Covid-19. Even after 5 months of various stages of lockdown we are yet not in a position to say anything with certainty about how long spread of this pandemic will last and how long the impact of it will last on economy and business even after the pandemic has subsided. Such a situation calls for drastic action plan and immediate decision making. I wish to discuss about what things one should do and also the things one should refrain from doing during the hard time we are passing through.
Need for the measures being suggested
Many have already lost their jobs. We do not know how many will be able to retain their jobs looking at the downturn in the economy and the numbers reported by various companies. This has affected not only the salaried but has also impacted self employed. The self employed are not sure as to when their operations will resume and pickup up. So whether you are a salaried or self employed, it is imperative that you implement some measures to minimise the hardship.
Preserve Cash
As the saying goes,” cash is king” so one should preserve cash resource to the maximum possible. So you should stay away from splurging unnecessarily and should not spend unless it is needed for bare survival. In case you are contemplating of making big picket purchase like car, television, mobile phone or any other costly electronic item, please postpone till you become confident that the pandemic has almost disappeared and there is not risk to your cash flow. Even if you are planning to buy a house please postpone it also due to the huge certainty around us.
Create a contingency fund to prepare for any eventuality in near future
As a prudent financial planning each one is expected to have a contingency fund equal to minimum of 6 months of your outgoings, including EMISs, preferably invested in liquid funds to take care of your expenses in case you lose your job unfortunately. It also comes handy even an emergency like situation in family like sudden hospitalisation or any similar unexpected situation. Those who have already lost their jobs and had created their contingency funds are better off today than those who did not have it. Those of you who have been able to retain their job should also create contingency fund immediately because the situation is not yet clear and the vicious cycle of declining economy and people losing their jobs will last longer than we thing.
Do not borrow or use credit card excessively
One should not borrow unless it either adds to your income or helps you create any tangible asset. Moreover the money to be borrowed should also be commensurate and appropriate for the occasion. These are the golden rules of borrowing money and are applicable during all the times and more during the bad times as one does not know how long the bad times will last.
Buy health insurance and life insurance
Almost all of you must have heard about the huge bills of hospitalisation of Corona patients. It is suicidal for a person not to have a medical insurance for himself and all his dependent family members. So in case you do not have any existing health policy, please buy one immediately. If you cannot afford a full-fledged health insurance policy due to paucity of funds, at least buy the Corona specific “Corona Kavach” policy available by all health insurance companies. Corona Kavach covers your hospitalisation bill upto 5 lakhs. This is an indemnity policy where the insurance company will pay directly to hospital or reimburse your hospital bills.
Even if you already have health insurance provided by your employer or have own policy, I would advise you to buy “Corona Rakshak” policy which is a benefit policy under which the insurance company pays you the full sum assured irrespective of the expenses incurred provided you have been hospitalised for minimum of 72 hours. Since the existing insurance policies, in most of the cases, do not cover cost of PPE and other consumables, Corona Rakshak will take care of the amount deducted by the insurance company while settling the claim for such items.
Like a health insurance, it is equally important for a person, who is financial pillar of the family, to financially protect the family members. Though the recovery rate is high but the times are very uncertain in terms of probability of one’s survival in case one gets infected. So you should buy a life insurance policy immediately in case you do not have adequate cover as of now.
The write is Chief Editor of ApnaPaisa and can be reached at Balwant.jain@apnapaisa.com
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