We are all locked in difficult and uncertain times due to the COVID-19 pandemic. Even after 5 months of various stages of lockdown, we are not yet in a position to say with certainty how long the pandemic will last and its impact on the economy. Such a situation calls for a drastic action plan and immediate decision making on the part of every individual.
Many have already lost their jobs. According to a report by International Labour Organisation (ILO) and the Asian Development Bank (ADB), as many as 41 lakh youths in India lost their jobs due to the COVID-19 pandemic.
There is also no certainty on 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 also the self-employed. The self-employed are not sure as to when their operations will resume and pickup. So, whether you are salaried or self-employed, it is imperative that you implement some measures to minimise the impact of potential economic hardships.
Here are things one should do and refrain from doing during the hard time we are passing through.
As the saying goes, ‘cash is king’, and so, one should preserve cash resources to the maximum extent possible. Stay away from splurging unnecessarily and do not spend unless it is really needed.
In case you are contemplating making big-ticket purchases such as car, television, mobile phone or any other costly electronic item, it is advisable to postpone till you become confident that the pandemic has almost ended and there is not risk to your cash flow. Even if you are planning to buy a house, please postpone the same.
As part of prudent financial planning, every individual is expected to have a contingency fund equal to a minimum of 6 months of your outgoings, including EMIs, preferably invested in liquid funds, to take care of your expenses in case you lose your job suddenly. It comes handy even in case of an emergency situation in the family such as sudden hospitalisation, etc. 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 your job should also create contingency fund immediately for unforeseen situations.
One should not borrow unless it either adds to your income or helps you create a 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, especially now as one does not know how long the pandemic and economic slowdown will last.
There have been multiple instances of COVID patients having to shell out huge bills for hospitalisation. It is pertinent for everyone to have a medical insurance for themselves and all dependent family members. If 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, please buy the COVID-specific ‘Corona Kavach’ policy made available by all health insurance companies. Corona Kavach covers your hospitalisation bill upto Rs 5 lakh.
Even if you already have health insurance provided by your employer or have your 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 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.
Views expressed are author’s own. Balwant Jain is the Chief Editor of ApnaPaisa and can be reached at Balwant.jain@apnapaisa.com