7 personal finance tips to guide you through these unprecedented times

Coming out of these unusual times financially fitter and stronger would require discipline, perseverance, conservancy tricks and fortitude. Here are some handy tips for millennials

We all are witnessing difficult times. Fighting a faceless enemy in the form of a pandemic, working from home, practising social distancing, braving equity market volatility, facing bad debts and mismanagement across many finance companies and ultimately suffering job contraction, pay cuts, muted (if at all) increases and incentives. Amid all this, the good news is that ‘this too shall pass’.

Coming out of these unusual times financially fitter and stronger would require discipline, perseverance, conservancy tricks and fortitude. Millennials could find the following tips handy:

Take adequate term insurance

• The amount should be enough to meet the needs of your dependents
• For junior dependents, till they become financially independent
• And for senior dependents, till they pass away
• Have appropriate medical insurance for self and dependents
• One of the biggest drains on finances can be illness, of self or people whom we sponsor
• Fool-proof your financial life by taking medical insurance of most probable ailments beforehand
• The trick here is not to go overboard, don’t be driven by fear while deriving the right amount. Let rationale and balance and customised needs guide you

Create an emergency fund

• Keep aside 3 to 4 months of expenses for any unplanned occurrence like job loss, delay in salaries, undeniable needs of family members

Budget your expenses

• Stick to making only the essential and critical expenses
• Delay the feel-good and impulse buys
• Avoid credit card usage as it gives a false sense of availability of money
• Avoid taking loans

Reduce your existing loans

• Prepay them through surpluses available
• Increase the EMIs wherever possible
• If you have multiple loans, do the above two for the loans with highest interest component and the highest tenure

Keep investing regularly

• Don’t waver on your monthly investing commitments. Remember that Rome wasn’t built in a day, and at these discounted levels, SIPs’ (systematic investment plans’) continuance is a must
• For portfolios which have suffered a loss, please hold on if the goals are at least 7 years away. Don’t convert your notional losses into real ones
• Equity markets are offering a huge discount, this is a time to add more, not bolt away

Dot your Is and cross your Ts

• House-keeping of financial documents is important
• All your financial holdings (investments, insurance policies, demat accounts, bank accounts) should have a nominee.
• Insurance policy details should be made known to the nominees
• Necessary passwords on various financial online accounts should be shared with the stakeholders
• Your smartness would lie in readiness — better now than later

Keep reminding yourself of the following serenity prayer: “God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

In short, stay calm. ‘Do your best and leave the rest’ would be a suitable mantra.

The author is a certified financial planner, founder partner of Srujan Financial Advisers LLP