COVID pandemic and budgeting..

The COVID-19 crisis has caused huge disruptions in individual’s lives, not just to employment but to health as well. Businesses have been enforced to temporarily shut down to support efforts in encompassing the COVID-19 pandemic, with some even ceasing operations due to the enormous losses experienced during the community quarantine. So saving is need of the time. The following are the ways in which individual can save the money during this pandemic.

• Prepare Budget before paying any Dues
Reminisce, the budget plays a very significant role to deal with any financial process. Make budget in such a manner where individual can divide their savings and spending accordingly. Due to epidemic lot of people gone their jobs, there are salary cuts and businesses are shut. So, income has condensed suddenly. One should revise their budget and plan according to the needs. Check what is more important first; their savings or paying the debt. Reduce the limit of their budget by cutting down all unusable expenses. Spend fewer and save more should be the mantra these days. If individual really don’t need anything then don’t go for it. Try to save money as much as possible. Even yet individual feel they are not in need of emergency funds save some part of their income. Try to clear all their dues on time consecutively to avoid any extra interest charges in the future.

• Build up Emergency Savings First
Individual will need to continue paying current bills but aim to have $1000-$2000 in their emergency savings account before tackling longer-term goal savings or paying off debt that they may have. Not only will that money deliver peace of mind and augmented psychological well-being, but it will be dangerous for the unanticipated expenses that will unavoidably come. It is significant to avoid additional borrowing as they are paying down other debt and having that cushion will help to do so.

• Pay dues if the interest rate is high
If individual have saved some emergency fund for the future then try to first pay them all their debt. Else, they will get trapped to pay a high rate of interest in the future. If their income is strained to a level where they have to pick between their EMIs and continue their saving options, pay their EMIs. Even though they have the option of delaying their EMIs with the RBI-mandated moratorium of six months, they should prioritize paying their EMI dues.

• Don’t Indulge in Hoarding
Like every other crisis, people are dreading the unobtainability of vital items and hence stocking things during corona virus lockdown. But they fail to appreciate that panic buying does no good. In fact, it can harm individual in two ways. Primarily, it may pinch their pocket as they spend more, and secondly, it limits access of items for others which lead to black marketing and eventually shooting up of prices.

• Pay down Debt
After individual have funded their emergency savings, then it’s time to pay off big debt like credit cards or personal loans. The most significant number they can pay attention to when paying down debt is the interest rate start by putting all their extra payments to the debt that is charging the highest interest, then go down the list from there.

• Go for Emergency Funds if Interest Rate is Low
It’s significant to retain in mind that an emergency fund is something that will always aid individual in need. Nobody can predict the future, so if they think evade paying EMIs for 6 months by option RBIs loan moratorium option then go for it and save money as an emergency fund. Their emergency fund should be more than 3 months EMIs. They have to cut back as much as conceivable in order to retain the cash flow. Make themselves for any next emergency now.

• Replenish Savings
Throughout all this, reminisce that whenever they need do dip into their liquid savings account, replacing it becomes their new primary goal. Rebuilding those emergency funds will be critical for a future, unforeseen expense. To do this, they may need to pause their other goals for a short time.

• Long-Term Savings
Once they have paid off the high-interest debt, start on their savings for any bigger goals they have. These could include a new car, home, college savings, or other larger expense.

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