The spread of Covid 19 has caused fear and panic among large populations across the world. This virus has disrupted personal finances and has brought economic activity to a standstill. It has sent shock waves across the stock markets with major indices down by more than 35%. It has forced people to stay at home and has severely impacted business operations. If situations like this persist we are likely to see any enterprises going out business and with that, the personal finances is also likely to suffer.
Measures to shore up Personal Finances
While companies formulate risk management strategies, it is time individuals have their own contingency plans. Below are few measures one can take;
Medical Insurance : Seriously, if you still don’t have one, the first thing you should do is to get a medical cover that covers pandemics like these. One may recoup the loss of income over time, but there is no way to recover loss of life. Your life is more important than anything now. Get a medical cover for yourself and your loved ones to help you cover the medical expenses. Especially when treatments like these can burn holes in your personal finances.
Term Cover : The mortality rates for Covid 19 are high. One in 10 people infected with virus in Iran have died. There has been no proven treatment/vaccine for Covid 19 yet and this should ring alarm bells. If you want to ensure that your family is able to lead a pleasant life in your absence, go get one now. The premiums for term covers are way lower compared to traditional policies so go get a Term Life Cover. Get a cover of at least 10 times your annual income or evaluate the amount of cover with the help of a financial planner.
Emergency Corpus : Businesses have slow down and lot of retrenchment plans have been announced. In these turbulent times more and more people are losing jobs and it is imperative that you understand that things will get worse before they turn out better. In such scenarios, it would be prudent to postpone non essential expenses and build an emergency corpus that covers 9 to 12 months of expenses. An emergency corpus should account for all mandatory expenses like insurance and EMI payments, maintenance charges and all essential expenses.
Investments : The stock markets have tanked and it is likely that your portfolio will be in the red, just like portfolios of other investors. It is not the time to panic and take any decision without evaluating. If you are following goal based investment strategy and have a well defined asset allocation model, then great, there is nothing to worry about. Connect with your financial planner and reassess the need to re-balance your portfolio now. Especially with the deep discounts available in the equity markets.
If you still don’t have a well laid out plan for your investments, it is high time to reach out to a Fee-Only Financial Planner and get a customized financial plan and investment policy statement defined for your individual circumstances, aspirations and goals.