The COVID-19 outbreak and subsequent lockdowns and impact on economies around the globe have put millions of families in financial duress in the last two months. While some families are battling with a salary cut, others are dipping into their retirement savings due to the job loss of the primary breadwinner or unexpected medical costs. Today, we will be addressing this topic and offering some tips to cope with financial stress and anxiety caused by the current pandemic.
1. It starts with acceptance
One of the best ways of managing any kind of stress or anxiety is acceptance. You need to accept the fact that your life might not be in your control for a while. Since the coronavirus crippled life asweknowit, we are all anxious about a lot of things – will I be safe? Will things go back to normal? What changes should I expect?
In case of a job loss or salary cut, the first thing you must do is accept the fact that during such times, these things can happen. Hence, rather than getting anxious about the future, start looking at things that you can control and work towards a solution. Take stock of your resources and create a plan to optimally utilize them. Look for alternative sources of income.
2. Avoid emotion-based decisions
A crisis can trigger deep emotions. During this period, some people might give in to fear or even paranoia and start hoarding essentials like it is the end of the world. This can be detrimental to your emotional and financial health. Also, this is not the time to stress-shop. One of the best ways to keep your emotions in check is to avoid an overdose of information about the pandemic. Watch limited news to keep yourself updated and double-check all financial decisions to ensure that you are not reacting but making informed spending calls.
3. The best things in life are free
Talk to others. While most people would deny it, one of the biggest factors impacting them is the lack of social interaction. With technology at your fingertips, leverage it and setup video calls with friends/family regularly. Try to look at this period as an experimental way of living for some time. Create moments of joy that you look forward to every day. Conserve your finances and do not buy things you don’t need only to feel good.
4. Keep a low-risk profile with your finances
The lockdown led to a market crash. Shouldn’t this be a good time to buy stocks? In fact, many investment experts recommend buying stocks when others are selling and selling them when others are buying, right? While conceptually, we agree with this thought, these are unprecedented times. Hence, despite being optimistic about the fact that the economy will recover, predicting the time it might take is impossible. Hence, if you are an investor or planning to invest, then ensure that you don’t take undue risks with your investments. If you have a regular source of income, then use a part of it to invest wisely.
5. Talk to your bank if the loan repayment is causing stress
The Reserve Bank of India (RBI) has allowed banks to offer EMI moratorium on term loans. If you have suffered from a job loss or salary cut rendering it difficult to pay the EMI, then talk to your bank and try to reach an agreement where you can repay without damaging your credit score or accumulating a lot of interest.
6. Buy health insurance
A pandemic is a time when everyone should be prepared to meet unexpected medical expenses. Researchers and scientists are still working on a vaccine and/or cure against COVID-19. Currently, the average cost of treatment in a private hospital in India is around ₹5-6 lakhs if the patient does not need ventilator support. This can double if a ventilator is required. Based on the number of dependents, you might need to be prepared to send a huge amount of money. This can be managed efficiently by buying a comprehensive health insurance policy that covers the novel coronavirus.
While the regulator has mandated all insurance companies to offer coverage for COVID-19, research your options and find the right package that fulfils your requirements. Major insurers like Tata AIG are offering custom-made plans that offer the perfect health coverage for COVID-19.
We know that these are difficult times. While we hope that the world recovers from it soon, each one of us needs to ensure that we get through this period unscathed – emotionally and financially. Such times also give rise to a lot of rumours causing further anxiety and stress. Ensure that you stay on top of things and do not allow your emotions to dictate your decisions. Eat healthy food, get a good night’s sleep, exercise for an hour in the day, maintain personal hygiene, and follow the instructions given by the authorities. We hope to see a smiling you on the other side of this crisis. Stay safe!