4 Things you should do to avoid financial crisis amidst the COVID 19 outbreak

We’re in the middle of lockdown 3.0. You’re at home. You switch on the TV and you see how the end of this lockdown is nowhere near us. You scroll your social media feeds to find out companies declaring bankruptcy. You log in to LinkedIn to read about enterprises cutting down salaries and unemployed professionals narrating their stories. You open your window to see how the world around you is not the same anymore.  

While you cannot change anything that’s happening, you can certainly change a few financial habits for good. Here are the 4 things you should to do to survive this pandemic without any financial challenges. 

Expenses < Savings 

The Work From Home and Work For Home lifestyle has surely taught us a lesson that we don’t need plenty of money for living our life. We need money for an elevated lifestyle. The lifestyle before lockdown demanded more money from us as there was an urge to go extravaganza about everything, whether it is a simple day out or a vacation. Now is the right time to sit and analyze the difference in the expenses before and after lockdown and accordingly cut down on the unnecessary ones to have a budget-friendly living with a limited income. 

It’s been proved time and again that money can’t buy happiness. Invest your time in planning your expenses to redefine happiness for yourself and your family. 

Savings must go on

We know, you’re dreaded by the current situation of the stock market and the fall in numbers, but don’t let it pause or stop you from investing in your SIPs. We understand you have financial goals to meet. However, unless you are failing to break even or undergoing a layoff or business shutdown, we advise you to stick to your habit of investing in SIPs. The NAVs might be low at present, but the increasing number of units will ascend the graph of profits for you in future. Hence, surf through the tough times and wait for the good times to roll in. 

Don’t overburden yourself 

If you’re unsure of your sources of income, avoid buying things on credit during this period.

This will add to your debt and make it more difficult for you to overcome the burden of debts. In such times of uncertainty, postpone any big purchases that are on your mind. Let taking loans be the last thing you do to ensure you and your family are in a safe place, financially. Focus on the necessities and plan your expenses accordingly. 

Set up an Emergency Fund 

Emergencies don’t knock the door before coming. Our current situation is the perfect example of an emergency. It’s the time that has taught us the value of an emergency fund. Also, let us make it very clear, Emergency Funds are meant only for emergencies like these and not for times when you run out of money because you overspent or when you need money to buy a gadget you did save for. 

Set aside an amount which will take care of you and your family during the time of crisis. It will also make you feel secure in the most financially insecure phases of life. 

Questions about financial planning and investing can be tricky to answer. You might be discussing and exchanging ideas about it on a group video call with friends and relatives, but it’s necessary to understand how your needs, your income and your goals are different from others and hence you need a piece financial advice that’s unique to your needs and lifestyle. Amidst the outbreak, don’t fall prey to panic about these topics. With the help of a financial advisor, be in a state of complete awareness about your money and investment plans. 

Stay IN. 

Continue to INvest. 

COVID-19 unmasks the pressing importance of budgeting

Be it the bread-earners of the family, the think-tankers of the businesses, or the policymakers of the governments, everybody in the world is currently clouded by the thoughts of survival and financial sustainability.

Today, the financial crunch can be felt by each and every living person in the world and is bringing to light the need of budgeting i.e. how to manage expenses with the limited income that we have today!

The post-COVID-19 period will surely bring with it, a recession and slump in the overall market, leading people into a fight against another crisis, if I dare say, a financial pandemic. Yes, it can be felt already considering the layoffs or business shutdown that we are seeing today. However, the good news is that if we take precautionary measures now; we might be able to sustain it to some extent. Thus, I decided to talk about 3 things that we should be considering to prepare ourselves for the financial crisis that waits for us down the road.

What is Budgeting

Recently, before the coronavirus spread, I was speaking to a young man (35 years old), who was working for an MNC in Noida. While we were discussing planning his finances, he said, “Ashish I know from where my money comes in, but I don’t know where my money is going out. ” To which I responded, you know what it’s a typical case of total budgeting failure, and may lead to mismanagement of finances. And before we delve into how much you should save for your financial goals, let’s understand what budgeting is-:

Budgeting is a process of creating a plan to spend your income wisely. Budgeting is nothing but balancing and tracking your expenses to ensure you are not overspending.

What You Earn Today Must Pay for Your Needs of Today and Tomorrow

Now that we know what budgeting is, there’s one thing we often forget – The money that we earn today is not just meant to pay for today’s expenses but also to provide for tomorrow’s expenses. Be it salary or profits, first take out the money for all your needs. When I say needs, it is not only for immediate but for the future needs also. If you spend all your income today, there’ll be none left for the growing needs of tomorrow like retirement, children’s higher education, contingency funds, etc.

 There’s No Thrill in Living at the Pay-Check Edge

If you are amongst the 40% people who are meeting ends and living on pay-check to pay-check, coronavirus has come as the harshest reality check.

If you are tensed about catering to your essential needs for the 21 days of lockdown, have you ever thought about how you will be able to survive your 21+ years of retirement? While optimism and being positive is a good trait, thinking that you’ll survive it when the time would come, is sheer arrogance.

Moving forward as the world contains this pandemic, it is necessary for people to reconsider their spending habits. The implication here is not to live poorly or in misery, but a lesson of living frugally must be learned, now more than ever, and avoid the strain of personal debts and EMIs in the times to come.

Here on – Take budgeting seriously or there’ll be serious consequences

During this lockdown, a message is going viral, “Jeevan yaapan ke kharche toh behad kum hai, sirf lifestyle aur dikhawa hi kharchila hai,” meaning, the cost of living is indeed low, it’s the lifestyle and pretence that is expensive.

In the period of lockdown, did it occur to you that – you are constantly trapped by the unlimited wants of the material world, trying to set an unrealistic example of your life? The quest to look better in front of relatives, peers and people, in general, have led to even the richest feel insecure with all that they have. As rightly said by Mahatma Gandhiji “The world has enough for everyone’s need but not everyone’s greed.” While you can indulge in luxuries and wants, you must not place them above your current and future needs.

Summing it up: Stop Wishing and Start Budgeting today

Taking the first step is the hardest things to do. But as they say, the journey of a thousand miles starts with a single step. What better time would you get than this to rethink your financial planning and expenses. Take one step a time, do it not just today but consistently, every day.

  • List down your expenses
  • Categorise them into discretionary & non-discretionary expenses
  • Eliminate or reduce discretionary expenses
  • And follow the plan consistently.

What should I do in this Current Market?

We have entered a world which was never seen before, never heard off and never thought of.  Carona is definitely a big issue which we all have to responsibly deal with. With markets hitting lower circuits and investors existing in Panic with deep losses,  questions are being asked – what should I do as an investor.

Let’s answer this from another angle. You have invested in a Restaurant or a Gym or you are running a hotel.. your business is totally shut… There are so many other businesses which are totally shut. You don’t know how long

it will take to open and come back to normalcy. What would you be doing now? Would you close down your business or wait till the dust gets settled. Most of you would say WAIT…

Let me take another example…You have a piece of land or flat as investment…with all that is happening… the value of it would have also fallen… gold has fallen, silver has gone down… what are we doing, are we selling them?  No… we are just waiting ….. let the dust settle.

Point is if we assume that the world is going to end -then there is no relevance of investments at this point in time. But if we assume – the world is going to restart again after a brief pause, them just hang on:

At this time three R’s are important

  • Remember this too shall also pass 
  • Remain calm
  • Be Responsible citizen

There is nothing new under the sun….  We had a crisis earlier also:

  • 1984  Prime Minister of India was assassinated
  • 1987  Stock market fell the most. that fall  was bigger than this fall
  • 1991 India was literally bankrupt
  • 1992 Harshad Mehta scam came out when the stock market tumbled more than 55%
  • 1997 Ketan Parikh scam shocked the market
  • 1999 Kangil was happened
  • 2000 Tech Bubble busted again markets  went down over 60%
  • 2001 WTC attacked happened in USA…it was  assumed that World War III would start
  • 2008 global financial crisis hit the world hard .. Markets went from 21000 to  8000 (62% Loss)
  • And now it’s 2020, where Corona which is a health issue is hitting the market hard. Today the world is united to fight. This crisis once over life will climb to normalcy.

During such a crisis, only big rallies have come. In May 2009 Sensex rallied over 18% in just one day. Yes, your patience will get tested, Confidence will shake many times, but you still have to believe on one fact humans have fought many battles earlier also and have not only survived but also thrived from Crisis.

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Before you start reading this blog, we want to ask you something. If you’re in the service sector, are you currently working? Are you getting your salary every month? If you’re into a business, are you receiving timely payment from your clients? If your answer to all these questions is YES, we want to let you know you are lucky. Continue reading “Were you prepared for the 2019 slowdown?”

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If something has drastically changed in the past few years, it is the way Indians do business. And any kind of change, whether good or bad, causes discomfort and distress for a while. Our economy is going through a transition period. The fact that our economy is still developing has made this transition even more challenging for us. Continue reading “5 Financial mistakes you should avoid in turbulent markets”