How You Can Prepare Financially For Life After The Pandemic?

The world has changed dramatically in these two years. A rare disaster, a coronavirus pandemic, has resulted in the loss of a large number of human lives. As countries implement necessary quarantine and social distancing practices to contain the pandemic, the world has been put into a great lockdown. The magnitude and speed of collapse in an activity is unlike anything we’ve experienced in our lives.

It is a crisis like no other, and there is substantial uncertainty about its impact on people’s lives and livelihoods. In addition, many countries are now facing multiple crises – a health crisis, a financial crisis, and plunging commodity prices, which interact in complex ways.

The pandemic has taken a tremendous impact on the life and family of the individual as well. Now the question comes how can I get over this? How will I meet these unexpected expenses? How will I increase my earning potential?

Steps to prepare Financially after Pandemic Life

1. Know your financial focus

 

Like most people, you probably have several financial goals: a comfortable retirement, long vacations, college for your children or grandchildren, the ability to leave something behind for the next generation, and so on. To achieve these different goals, you may have to follow different investment strategies — and you may have to make some trade-offs along the way.

Many financial goals that were initially set needed to be changed or stopped altogether. While it would be nice if we could improve many of the financial aspirations, we have for ourselves and our families at once. While many people have experienced good times this year under pressure to improve, it is best to identify two to three key areas of focus.

2. Plan and actively manage your finances

Personal financial planning is extremely important. Income, expenditure, savings, investment and debt should be aligned with the short term and long-term needs, wants and goals of life of the family. Along with taking advantage of opportunities, it is also important to be prepared for exigencies. Financial planning helps to remain in charge in both these situations. It is also important to proactively manage, revisit and revise plans and implement changes in line with the changing needs, wants and overall economic scenario.

3. Life insurance and health insurance are important investments

Life is uncertain. The pandemic has not only proved this to the world but has also shown us how unpredictable life can be. Hence, ensuring financial security for the family is a top priority. One should invest in a life insurance plan to ensure adequate coverage for the family.

4. Revisit your budget and make adjustments as needed

A budget simply shows how much money is coming to you and how those funds have been spent. It is one of the most important tools in building a successful financial future, as it helps you make the most of your money. Regardless of economic situation or which generation you fall into, creating and managing a budget can benefit every consumer. A budget gives people a sense of control over their money.

5. Build an emergency fund before investing money

An emergency fund can help you stay afloat in times of financial crisis. Such a fund should be for family income of at least 6-12 months. Also, this fund should be quickly and easily available in the form of cash when needed. Most importantly, the fund should be treated as non-touchable – available only for use in emergencies.

6. Adjust debt payoff plan

A debt payoff plan takes a comprehensive look at all the debt you owe and organizes it into a structured, consistent routine so that it can be met. Since debt is heavy, a successful payment plan moves it into manageable steps. The plan will consider all your debts, your income and your monthly budget. The ultimate goal of a debt payoff plan is to ensure that you have a financially secure future. Being in debt means that you are not able to buy the things you want or even live the quality of life that you want.

How to set up a debt payoff plan

    1. List your debts

    2. Prioritize your debts

    3. Find extra money to make payments

    4. Knock out one debt at a time

    5. Start building up your savings

7. Monitor your credit score regularly

If you check your credit score regularly, you are always updated about any changes in your credit score. If a fall does occur, you can find the cause sooner and remedy it before it becomes more damaged.

Reasons to check your credit report regularly

    1. Stay Updated on Your Creditworthiness

    2. Identify Errors

    3. Make Informed Decisions When Applying for New Credit

    4. Helps to Avoid Identity Theft

    5. Keeps credit utilization ratio under control

8. Prioritizing Expenses

It can be tough to decide which bills and monthly expenses to pay first, especially if you’re on a tight budget. Although it’s important to try to make all of your monthly payments, it may not always be possible. Prioritize where you would like your money to go. Typically, this includes housing and utilities, food, transportation and communications, and some clothing.

Steps for Prioritizing Expenses

    1. Make a List of Your Expenses

    2. Identify Your “Must Pay” Expenses

    3. Pay Your Debts

Lavanya Kanchanapalli
Lavanya Kanchanapalli

Partner at LiteFin

 

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