To deal with their finances during such uncertain times, one should follow the most basic things of financial planning.

Emergency Fund

The first step to deal with such a situation is building an emergency fund. One should keep sufficient amounts needed for at least six months in liquid form? cash, savings bank deposit, breakable fixed deposit (FD), liquid/short-term fund, etc ? so that the person may sail through a crisis period without much hardship.

Insurance Cover

Insurance is the most important instrument that provides financial cover against unforeseen eventualities. Individuals should take life insurance to ensure the protection of their financially dependent family members, as well as health insurance to protect their savings in case of a huge financial burden during hospitalization.

Credit Score

In case of the absence of adequate emergency funds and/or insurance cover, a person may need to take a loan. To get a loan at a lower interest rate, one should maintain a healthy credit score. For this, timely repayment of existing loans and credit card dues, etc must be done. Apart from a loan, one may also opt for a credit line to ensure quick availability of money on credit up to the set limit.

Long-Term Loans

The current low-interest regime may prompt you to buy long-term assets like cars, AC, etc on credit, as well as immovable assets like property. However, taking a long-term loan creates an obligation of spending future earnings to repay the loan. In case of loss of earnings due to some emergencies like the Covid pandemic, it aggravates the financial hardship. So, it’s better to avoid unnecessary purchases on credit to reduce future financial burdens.