Managing Your Finances in Times of Economic Distress

Due to the advent of the COVID-19 pandemic, economies and societies around the world have been disrupted like never before. With the number of active COVID-19 cases increasing every day, the entire country has entered survival mode. Everything non-essential has been cut off. The best example of this is the mass layoffs the country has seen as a result of the pandemic. For example, large companies such as Ola, Uber, and Swiggy have laid off a significant number of their workforce, with the numbers standing at 1,400, 600, and 1,100 employees respectively. All of this is a direct result of the pandemic, which has resulted in companies (both big and small) losing revenue. In such a dire situation, taking control of their finances and savings has become a top priority for people around the world. Here are 4 ways you can manage your finances and increase savings during this time:

1. Create a Plan and Stick to It

The ‘plan’ here is nothing but a budget that you need to create (based on your financial situation) and stick to. Unless you have a budget, you won’t have a clue where your money is going. Pandemic or not, there are many areas where you spend your hard-earned money such as food, utilities, transport, and entertainment. Sticking to a budget will help you understand the areas where you spend the most. You can then take measures to minimize your spending in those particular areas, based on whether it’s a priority or not. You may already have heard of the popular ‘50/30/20’ rule, which helps you budget. However, you need to find a version of this rule that works for you. For example, you may be unable to put 20% of your salary towards savings, or your ‘needs’ might not amount to 50% of your salary.

2. Buy Only What's Necessary

‘Stock, don’t hoard’ is something you must have already heard of in the past few months after the onset of the COVID-19 pandemic. It’s important to realise that in your endeavour to be properly stocked up on essential items, it is also important not to hoard. Many people, in the past couple of months, have resorted to ‘panic-buying’ and an injudicious hoarding of sorts, because of the lockdown and the need to maintain social distancing. This will lead to supermarkets and stores running out of stock, which will only hurt those in need later. Not only that, but you will only end up spending a lot of money unnecessarily. It is also a good idea to plan exactly how much supplies you would need for a month. Then, create a shopping list and stick to it.

3.Save Wherever You Can

As mentioned in the first point, the advantage of creating a budget is that it shows you where your money is going. Right now, thanks to the COVID-19 pandemic, almost all companies have implemented a work-from-home policy or WFH, in an attempt to keep their employees safe. So, if you’re at home most of the time, you’ll find that you automatically cut down spending in certain areas. Office commute expenses, eating out or ordering in from restaurants, shopping, and watching movies are some obvious examples. You’re not travelling to your office anymore, and you can cook your food instead. So, the idea here is to take all the money you’d usually spend on these items and save it all. Plain and simple!

4.Pay Off All Your Debt

Debt, such as credit card debt or personal loan EMIs is the biggest hurdle to increasing your savings. Whether you have to pay off credit card bills or owe your friends some money, make sure you pay it off in time. All the money that goes into paying off debt can also be used to potentially grow your savings. So, even if you apply for a loan, make sure you pay off all the EMIs on time. If you need emergency funds for a purchase, it’s also a better idea to use a money loan app than a credit card. Those little plastic cards take a lot from you in terms of interest. With a personal loan, you will save money on interest payments and will have flexibility when it comes to repaying your EMIs.

In Conclusion

‘Save more, spend less’ is the need of the hour. The points illustrated above are good tips for saving money. Ideally, you should already be following all four of them in today’s economic climate. If you’re not, please get to it ASAP. Applying for a loan is also a good way to consolidate your debt. If you want the best personal loan app out there, it’s KreditBee. Just download the KreditBee app from the Google Play Store, complete your profile, and leave the rest to us! To learn more, you can write to us at [email protected] or reach us at +080 44 292 200.