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The COVID-19 pandemic was a wake-up call for people across the globe, unlike anything experienced before. It also brought irrefutable financial learnings for us. While there were recessions earlier, we saw death tolls rising worldwide due to the pandemic, leading to a global shutdown. We witnessed business closures, pay cuts, increased unemployment rates, struggling industries, etc. We were indeed not ready for a worldwide lockdown, which challenged our finances and investments.
Yet, this lockdown provided us a chance to re-examine and relearn certain things in life. It has always been emphasized that one should have sufficient financial planning for any impending economic crisis. As these are indefinite times, being secure about future finances by strategically planning them is all the more critical. We have witnessed the importance of money and how we strategize for life’s uncertainties. So, what are the financial lessons that the lockdown has imparted to us?
Here are 5 Financial Lessons To Learn From COVID-19 Pandemic and the Resulting Lockdown:
1. Be on top of your finances
Many of us in the past year came face to face with our financial status quo for the first time and realized the gaps therein. We often go about our routine without paying much heed to what constitutes our fixed and variable expenses or take note of the areas where we could save if only we were mindful. We also forget to visit our finance books regularly to evaluate what worked and what didn’t. This is crucial to ensure that you’re in charge of your finances and not get overwhelmed by unexpected outcomes. Hence, it is never too late to start playing a more active role in building and maintaining your finances.
2. Build an Emergency Corpus for Times of Crisis
One of the smartest things to do is to preserve your financial safety during uncertain times. Monetary crises are times when things go haywire with no certainty or stability. Without appropriate care, you might quickly find yourself jobless and bankrupt. If you have just arrived in the job market or into a business where income remains low, having money set separately can help save up for a rainy day and attain your long-term goals. So, as a lesson for the future, save some money on your fixed expenditures into an emergency deposit. During the next emergency, you will know that you can endure with a robust emergency fund and overcome any unpredicted financial setback.
3. Invest in Health Insurance
The COVID-19 illness has severely affected people’s health. Hence, it is necessary to take this as a learning and opt for health insurance that covers critical care and life-support necessities. If you don’t already have health insurance, now would be a good time to reconsider your decision and buy one.
4. Have a Long-Term Vision
If there is anything this pandemic has made us conscious of, it is that nothing is assured. Financial disruptions are a normal part of life, and considering this; you need to cultivate a long-term vision to form financial stability. Be flexible with your monetary plan by regularly reviewing and re-evaluating your financial plan. Further, learn how to plan your finances to face any unknown crises in the future.
5. Consider Having an Additional Source of Income
If you have faced pay cuts or layoffs, this must show you the myth of job security. To keep your income flowing, consider having an additional income source in the form of a part-time job, interest from investments, etc. Further, people with more than one occupation are enduring better than the ones with one consistent employer. Therefore, work on having a second source of income to keep you protected throughout every future crisis.
Remember! Global financial dips are not in your control, but learning lessons from them and applying them in your lifecycle is in your hands. You have the advantage of structuring wealth while providing financial protection through savings. Take a step back to re-examine your funds and layout a plan to plug the current loopholes. Remember, lockdown will be temporary, but your financial practices will stay with you for long.