Whether you are just entering the job market, self-employed, a newlywed couple, or new parents, the economic impact of COVID-19 has been a wake-up call for everybody. It has always been asserted that one should be adequately prepared with necessary financial planning for any future fiscal crisis. As these are uncertain times, being assured about future finances by strategically planning them in advance is always a wise thing to do. Here are some of the most valuable financial lessons we can take from the ongoing pandemic.
Set aside an Emergency corpus for times of crisis
This is one of the smartest things to do to maintain ones financial security during uncertain times. If one has just entered the job market where security of income remains low, having funds set aside can not only aid in saving up for a rainy day but also in achieving ones long term goals. Another instance of an emergency corpus being useful is for those who run their own business. In the context of the current uncertainty it is always advisable for a self-employed professional to keep a robust emergency fund in place so that they are able overcome any sort of unexpected financial setback.
One of the most important factors while building an emergency corpus is that its pay-out should be guaranteed. One such tool to ensure this is the Assured Savings Insurance Plan by ICICI Prudential Life. You can build a robust savings corpus while providing financial protection for your loved ones in case of an unforeseen crisis with the plans guaranteed maturity benefit. The plan also offers the opportunity to grow your wealth with guaranteed additions* that would be added to your policy every year depending on your policy terms.
Get rid of unnecessary expenditures by budgeting
Personal budgeting is an important aspect to maintain a healthy financial condition. Budgeting gives you an insight into your fixed costs, variable expenses, and more. With a budget in hand, you can also plan long-term by gauging whether to accept the credit moratorium being offered by the banks or can you manage by reducing your other expenses and saving on the interest payments.
A well-planned budget will also help you stretch your available financial resources when the lockdown is presenting uncertainties like no other time where reduced paychecks and unpaid leaves are becoming mainstream.
Portfolio should have minimal consumer credit
Some of us may have committed up to 50%, or more, of their monthly income to repaying loan EMIs. However, in the current situation faced with the possibility of job loss or significant pay cuts, it will get tough to repay all EMIs on time. Surely, the RBI moratorium for loans has given some temporary relief, but it will not be enough to solve the challenge.
So, the pandemic is teaching us that just because we can opt for credit, it does not mean we should consider more than necessary. Financial experts suggest that the EMI payments should not be more than 20-30% of the total monthly income. Thus, no matter if you have taken a home loan or a short term loan, the repayments should not constitute a major chunk of your monthly salary.
Mitigate risks by diversifying your investment portfolio
If you havent made the most of the investment options available to you, it is never too late to start. From market linked investments to a variety of non-market linked savings tools, you can begin to put your wealth into places that allow it to steadily grow with time. One of the definitely ways to reduce the risks associated with market investments is to keep your portfolio diverse. Keeping the current situation in mind, a great way to reduce risk in your investment portfolio is to invest in a plan like ICICI Pru Assured Insurance Savings Plan that offers guaranteed benefit at maturity along with guaranteed additions* to grow your wealth.
Investing in life insurance has become a necessity
The famous philosopher, Aristotle, once said, It is during our darkest moments that we must focus to see the light. COVID-19 has shown that irrespective of our age and socio-economic background, unfortunate events can strike any time. No one could have predicted such unprecedented times, and now people are far more aware of securing their families against unforeseen events. Probably, prior to the pandemic a lot of us viewed life insurance largely as a tax-saving tool. But now people realise its importance as valuable financial buffers for their loved ones economic conditions in their absence.
With ICICI Prudential Lifes Assured Savings Insurance Plan, you get the benefit of life cover, in addition to the tax benefits# of life insurance, while also building a corpus of savings that you will be assured once your policy matures. The life cover can be availed as a lump-sum payment that ensures that your loved ones financial needs are taken care of in case of unfortunate event.
Create a long-term vision
If theres anything that COVID-19 has made us realise, its nothing is certain. Financial upheavals are a normal part of life. Thats why you need to develop a long-term vision to build financial stability.
Be flexible with your financial plan as well because learning how to manage your finances well to build wealth is a process, not a goal you set and forget. Be prepared for long-term and consistent learning. Regularly review, revaluate your financial plan and adjust it as necessary.
COVID-19 can be a valuable learning lesson about financial preparedness for the future. There is always some level of uncertainty about the future. The sooner we embrace this, the sooner we can get started with financial planning that can weather future crises. One easy way to cover multiple bases is investing in a robust and secured plan like ICICI Pru Assured Savings Insurance Plan.
You have the benefit of building wealth while providing financial protection for loved ones in case of an unforeseen crisis. Your savings earn guaranteed additions* every year, and you have the guarantee of receiving a lump sum at maturity. These benefits make ICICI Pru Assured Savings Insurance Plan an attractive way to save for the future while growing your wealth.
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