The pandemic situation has stirred up the worst crisis which will take a long time to recover. The rising unemployment rate, falling interest rates, looming recession, job security has stressed the minds of most of the employed individuals.
During these testing times managing money is very important to survive and by avoiding the following list of mistakes one can safeguard themselves from landing into a financial crisis.
Defaulting Insurance Premium Payments
Payment of insurance premium regularly will help the policyholder to get the required health insurance coverage in case of hospitalization. The ongoing pandemic crisis has uplifted the requirement of having a health insurance policy in place and one should ensure that all the family members are covered under the health plan.
Without having a health insurance plan is a riskier thing as the hospitalization charges threaten to drain out your savings and is likely to make a big hole in your pockets. Hence always make it a priority to pay insurance premiums on time and avoid defaulting.
Not Having Sufficient Liquidity
Any normal earning person should maintain liquid cash which can be easily accessible and the same should be treated as emergency corpus. Ideally, around three to six months of your monthly income should be parked in this fund (if married).
If you are married and have kids then it is better to have at least 12 months salary maintained in this emergency corpus and it should be easily available during distressing times.
It should be liquidated only during the crisis period be it a loss of income, health emergency, repair works (emergency) and so on.
Not Diversifying Investment
An investor needs to diversify their investment portfolio into various asset classes as this will reduce the level of risk and henceforth the returns from it as well. The famous going says "Do not put all your eggs in the same basket".
Having a mix of asset classes (investment diversification) will help an individual to create an all-weather investment portfolio and performs its level best in any of the given situation.
For Example,the current coronavirus has helped the gold rates to rally and touch sky-high prices and on the other hand, the equities markets are witnessing a slump and so are the interest rates. So, by spreading the investments in different avenues one can minimize risk and maximize returns.
Not Being Mindful About Credit Card
Owing to a credit card during such testing times comes in handy as you can make a credit purchase now and can repay it later within the interest-free period.
But ensure that you avoid late payment as you will end up paying heavy interest rates which falls in the range between 36% - 48% per annum concerning a few credit cards. Try to repay the dues in full each month, if you can.
Avoid Being a Spend Thrift
It is very essential and important to safeguard your money and save as much as you can during these testing times. As we all know that money is one of the most important things for a human being to survive this pandemic crisis. So, take extreme care while using money and try to minimize unwanted expenses as much as possible.
Fix yourself and your family strictly and spend only on the required expenses. Try to save as much as you can in all the ways.