- Date : 21/06/2020
- Read: 4 mins
You’ll need to be more strategic with your money moves once the pandemic is over if you wish to stay in the pink of financial health.
No matter how you approach money, your money behaviour must have changed significantly during the coronavirus lockdown. Discretionary expenses such as eating out, shopping, travel, etc. would have dwindled to almost nothing, whereas your grocery spending and electricity bills would have seen a hike.
Once the lockdown is over, you may be tempted to go back to your typical money habits. This would be fine in a normal scenario but in a post-pandemic world with an economic crisis looming, it isn’t very prudent. Alternatively, you may be inclined to overcompensate for things like shopping and outdoor entertainment and increase your discretionary spends – perhaps even take a loan to go on a trip or use your emergency fund to redo your home.
Such moves aren’t the wisest. In fact, there are some money mistakes you need to stay away from once the lockdown is over and life returns to a semblance of normalcy. Let’s see what to be on guard against.
1. Spending mindlessly
There’s no arguing that the lockdown disrupted everyone’s daily life – from how we work to how we work out. After not having gone to a movie theatre, mall, restaurant, etc. for months, it’s normal to want to do these things. But remember to not spend your money mindlessly on such indulgences. Instead, all the money you managed to save during the lockdown should be wisely used towards your emergency fund, repaying debt, or making investments.
2. Taking new loans
There was an economic crisis looming already before the pandemic broke out, but now it’s inevitable. People are losing their jobs and suffering pay cuts; there’s absolutely no security of employment at this point. In such a scenario, taking on new debt – whether it’s good debt like a home loan or bad debt like a personal loan for travelling – will not help.
3. Making travel bookings
Some airlines have started taking advance bookings, and soon hotels may start doing the same. Your life may be all about wanderlust, but at this point you shouldn’t indulge in advance bookings for travel. There is no certainty when things will return to normal, or if international travel will ever go back to what it used to be. It’s best to wait it out and not make travel plans any time soon.
4. Mismanaging EMIs
There are some relaxation policies for loans and EMIs, such as a loan repayment moratorium. Depending on the bank and the loan, you can delay your EMI payment, increase the loan tenure, etc. to gain a bit of financial relief during the pandemic. It can be of great help right now if you really need it, but if you’re able to pay your EMIs, credit card bills, etc. on time as you normally do, you should go ahead. This is because most of these options are only meant to ease your financial burden right now; they might become a burden later.
5. Sticking to the same budget
The condition of the world and the state of your finances are not what they were like before the pandemic. Hence, your budget after the lockdown cannot be the same either. You need to sit down – either by yourself or with your partner or financial advisor – and figure out a new strategic approach to meet your money goals. Ensure that you reduce discretionary expenses and make your emergency fund stronger.
After the coronavirus pandemic, taking extra care of your financial health will become the need of the hour. You may have already thought of certain changes in your financial strategy that you may want to make – whether it’s investing more in liquid funds or relying less on your salary and diversifying your sources of income. Put these into action when the time is right and stay safe financially as well. Here's how you can prepare yourself financially during a pandemic.