The COVID-19 pandemic has had profound effects on all aspects of life for families and communities. In the upheaval wrought by the novel coronavirus, loved ones’ lives are lost and livelihoods are threatened, ways of living are upended, and the “new normal” ahead is unclear and precarious. The ongoing crisis has taught a big lesson on why we must maintain disciplined financial habits so that we and our families don’t suffer. Here we are sharing seven financial habits which will help you manage your money better:
1. Appoint a Nominee
By appointing a nominee, the policyholder makes the person responsible for claiming all sum assured as well as any other bonus upon death claim. Therefore, a policy holder should opt for a responsible person who can take the responsibility of the family in their absence. The nominee can be either a family member like mother, father, wife/husband, son/daughter; or any distant relative such as nephew, uncle/aunt.
2. Keep aside an Emergency Fund
An emergency fund is a bank account with money set aside to pay for large, unexpected expenses, such as unforeseen medical expenses, Home-appliance repair or replacement, Major car fixes, Unemployment. Emergency funds create a financial buffer that can keep you afloat in a time of need without having to rely on high-interest loans. If possible try to build a corpus equivalent to your 6-month income.
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3. Don’t put all your eggs in one basket
The famous English proverb says, “Don’t put all your eggs in one basket”. You must follow this proverb as a thumb rule and not invest everything in one plan or financial instrument. Rather have a big gamut of investments ranging from small savings, mutual funds, SIPs, stock markets, etc so that you have a bigger range.
4. Apply for a Health Insurance
The current COVID-19 pandemic has made the entire world sit up and realize that medical exigencies are unpredictable and can cause a financial upheaval that is tough to handle. Choosing the right health insurance policy is very important so that you have a big cushion during medical exigencies. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly.
5. Apply for a term plan
A term plan is the purest form of life insurance. It ensures your family’s financial security and gives an option to protect them from critical illnesses such as cancer, heart diseases, etc.
6. Use credit cards smartly
The biggest advantage of a credit card is its easy access to credit. It functions on a deferred payment basis, which means you get to use your card now and pay for your purchases later. It is extremely useful when you are in need of short-term funds. But you must be very wise in your spending. Remember, in the end, it is you who are paying the bill.
7. Minimise your debt
The last thing amongst all these Financial Habits is to minimize your debt. When debt keeps piling on, all your means and possibilities shrink. Borrowing must come with a concrete plan. Know the period or window by which you can complete the debt burden. Also, in the fragile times we live in, don’t saddle your family with unwanted debts.
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