The impact of the Covid-19 pandemic and the subsequent lockdowns has impacted the world all over. In addition to the life threat, the financial impact by the pandemic is sensed across the world. While travel, hospitality and entertainment businesses have been the worst hit, other industries have also been deeply impacted. If you are either a business owner or a salaried professional, you need to be careful about managing your finances for the time being, until a solution emerges.
Five ways to manage your personal finances during Coronavirus pandemic:
- Decide on the Moratorium Scheme:The Government of India has provided some relief measures, and one among them is the RBI moratorium scheme. This moratorium is a financial arrangement by the RBI which provides an option to the borrowers to defer their EMI payments period between Mar 01 – May 31, 2020. As of May 22, 2020, the moratorium has been further extended till Aug 31, 2020. Note that the moratorium is not a cancellation of EMIs by any means. Experts have advised the borrowers to take the scheme only if they are facing a deep financial stress during this period due to loss of income. If this is not the case with you, it is advisable to not opt for the scheme and continue to pay your EMIs as per the original schedule.
- Pay off your Debts:If you can, you can close your credit card dues as the interest accrued due to credit card purchases is higher than other loan types. An instant personal loan is a different kind of unsecured loan which typically have higher interest rates compared to secured loans. It provides better flexibility than a credit card EMI as you have between 12 – 60 months to repay the loan.
- Cut Down your Expenses:The quarantine due to the Covid-19 pandemic has reduced the living costs by a significant proportion, primarily because the lockdown has halted many activities such as travel, vacations, fuel expenses, eating out, organising events/functions, shopping, and so on. Hence this period is the best opportunity to cut down on your expenses and start saving for the future. Consider this situation as similar to the hibernation period where you need to keep for the near future where things will return to normalcy.
- Newer Loans:In case you are thinking of taking a top-up on your personal loan, you may want to consider about the additional financial burden due to the loan and can defer the decision to a later point of time. However, you can take up new loans based on your immediate requirements and documents required for a personal loan. Alternatively, if you have an asset, you can leverage the asset to get mortgage loans(loan against property). The benefit of LAPs is that since they are secured, they offer better interest rates than unsecured loans. Based on your property value, you can also claim a higher amount which will help you to overcome any financial challenges that you have. However, it is always a great idea to discuss the potential lending options with your financial advisor so that you can make an optimal decision to manage the finances in these uncertain times. If you have financial assets, you can also consider a loan against securities which provides you a line of credit against financial assets pledged, such as stocks, mutual funds, insurance, etc.
- Loans for Businesses:If you are a business owner, you can take advantage of the benefits package for MSMEs by the government. MSMEs make up to a significant proportion of the economy, and hence the government has recently announced a fiscal stimulus package to boost liquidity among firms. This move works in favour of small business owners so that they do not need to invest their personal finances for business expenses and get into financial instability.Alternatively, if you are a salaried person and want to invest in a side gig, you might want to know about the prevalent market conditions and take up an opportunity that can provide additional finances to your pocket. Modern financial institutions encourage individuals to venture into entrepreneurship, and you can make use of the funding for your benefit. However, you want to be careful about your venture in these unprecedented times but note that most of the successful businesses today were found in such recession times only.
Conclusion
As we battle the impact of the Coronavirus pandemic together, we might come across newer opportunities that might open several doors for you. The objective is not to lose faith in our actual thought process and manage your finances effectively, thus helping you secure your future.
Lakshmi Mittal 
