Taking care of financial health during the pandemic

Jagriti Bhattacharyya

(Views expressed in this article are personal. The writer is a Certified Financial Analyst and a Financial Consultant with a global consulting firm. She can be reached at jagriti.bhattacharyya@gmail.com)

"Siddharth (name changed) is a senior-level marketing executive with more than twenty years of industry experience. He was employed with a well-known Global Conglomerate based out of Delhi and was leading a plush life with his family, living in one of the upscale apartments in NCR. When the COVID-19 virus started creating economic and business disruptions, his company's revenues took a hit and as part of the downsizing exercise, Siddharth's role within the company was made redundant and he lost his job. He spent the next few months trying to land a new job, but with most businesses trimming manpower Siddharth soon found himself exhausting his three months' severance pay with no emergency savings to fall back on. Finally after discussing with his family, he decided to move back to his hometown in Thrissur, Kerala where the cost of living would be significantly lower than NCR until he could find a new job."

Siddharth's case isn't a one-off instance. We are currently in the midst of an unprecedented crisis; businesses have reported little or no revenues due to diminishing customer footfalls and lowering demands while job losses are at a high and hiring activity is at a low. In such a scenario, while we are on a war-footing against the virus with utmost care on health and safety, it is also paramount for us to take care of our financial health, as financial wellbeing is closely linked to mental and emotional health. Research has shown that suffering from financial anxiety could lead to undue stress in our personal lives. As the world adjusts and take its time to overcome this pandemic, below are a few strategies which we could all put to use to address our financial concerns:

Cut down on discretionary spending – Depending on where you live and how your lifestyle is, COVID-19 has brought an abrupt halt to all those weekends at the mall or cinema, those exotic vacations and fancy spa appointments. Yet, if you have still been planning to buy a SMART TV or upgrade your refrigerator, it is better to put off that decision to sometime later. Probably you will soon learn to feel good about spending less and saving more. Remember every penny spent less, is a penny saved more.

Prioritize savings first and Insurance next –While it is always a must that you should save three months of household expense into an "Emergency bucket", this time calls for enhancing that bucket by cutting down on discretionary expenses mentioned above or by pooling in some from your investments. With food and health expenses on the rise, your emergency fund should have savings equivalent to six-months to one-year of household expenses. Once this is in place, ensure that you and your family are adequately covered with life and health insurance.

Upskill to stay relevant in the job market– Once the pandemic is over, organizations will recognize the benefits of some of the decisions which they were forced to take during this time – working remotely, having smaller team sizes, automating jobs etc. Irrespective of whether you are an entry level or tenured professional, it is now increasingly important to be agile and adaptable to the changing industry norms. So if there was a Cloud Computing or a Data Analytics or a Digital marketing course that you always planned to do, but always found yourself constrained for time and intent – now is time! This not only will make you more valued at your present company but will also widen your horizons when you need to look out for the next opportunity.

Explore additional avenues for Income – Earning a few extra bucks might not be of much significance to your savings kitty immediately, but the power of compounding ensures that it does make a noticeable impact in the future. How about investing some time in your hobbies and earning some money too? Know an additional language – there are countless apps online through which you could teach, Pro at the guitar or love painting – you could teach some neighborhood kids or better still, maintain social distancing and teach online.

Re-look at your financial goals and re-balance your portfolio– Portfolio re-balancing should always be done yearly; yet this is often put off due to lack of time or knowledge of the financial markets. If you haven't taken a good hard look at your investments, evaluated whether you are on track to achieve your financial goals – be it your child's education, marriage or your own retirement, it is important to seize the opportunity to align all investments to your goals. Never fall prey to mis-sold products and always seek views from an unbiased financial advisor only. Finally, always have a disciplined long-term approach to investing and do not exit the market due to this temporary downturn.

The COVID-19 situation has impacted our lives in unexpected ways, but with a little extra planning and by threading on a cautious path, we can ensure that our financial well-being doesn't get hampered in any adverse way.