Most of the country’s workforce is now working from home. People have some extra time on their hands due to this. Wondering what to do with this free time? Why don’t you spring clean your finances?
Here are five money-related things you can do during the lockdown.
Get insured, check current insurance status
Since the reason for this very lockdown is a viral disease, the first thing on your mind should be checking if you have adequate insurance. Buy a health cover for yourself and your family, if you do not already have one. If you do, check the coverage.
A lot of people depend on the medical cover given by their employer and do not possess a personal cover. At a time like this, not having your own cover is dangerous because jobs and industries themselves are at risk. If tomorrow you fall sick, you do not want to end up in a situation where you neither have any health insurance cover nor a job. Therefore, we recommend some level of personal insurance for self and the family.
Life insurance is important as well. Even if people have bought a life cover, then it might not be up to the required sum assured. One should check if their cover, sum assured is good enough for them.
Check your expenses, save up in case things go further south
Across sectors and firms, job losses and/or pay cuts are happening or could happen soon. So, preparing for such a contingency is something everyone should do.
How much money should you have for emergencies? Minimum three months’ worth of typical expenses, along with your EMIs, should be in your account.
Reviewing financial documents, rectifying financial plan
Spring clean your financial assets such as bank accounts, demat accounts, mutual fund investments and insurance policies. This will not only ensure good maintenance of finances but also provide a consolidated view of your financial status. Gather all your documentation in one place, have everything on paper, along with the necessary passwords and confidentialities, both online and offline. Clean up all old files with unnecessary paperwork, account statements or old insurance policies.
Also, now is a good time to review your financial strategy: check what worked for you and what hasn’t and do a comparative analysis.
Investing in these times
There is a bloodbath in the equity market. If you have taken care of all your necessary expenses, if you have money to spare, then you are in the position to take a long-term view. The markets can go further down from this point, nobody can know the answer to this or what the exact bottom will be. If you have the money, the risk appetite and can stomach the volatility for some time to come, you’re on to a very good path.
That was equities, what about debt? There have been cases where investors have been abandoning equity to move to debt investments. Is this a good switch? Relocating money from equities to say, FDs is a grave mistake, so is stopping mutual fund systematic investment plans (SIPs). The debt space is not safe either. If the current situation continues, defaults will start happening everywhere, corporate FDs, NCDs, and so on. As a result, debt mutual funds will start crashing too.
So, have a good mix of assets to help you tide through these tough times.
Get your banking, tax-related activities in order
Take out some time to update documents that need updating. Make the most of any free time you get now to sort out those banking activities that you kept putting off. Now since most banks are short staffed and are encouraging the use of digital routes, update your documents using your Net banking account.
With time on your hands, why not take a closer look at the details of the new tax regime announced in this year’s Budget. If you have not done your tax-saving investments yet, the finance minister has given you time till June 30.
Source: Economic Times