{"id":330,"date":"2018-11-07T17:40:16","date_gmt":"2018-11-07T17:40:16","guid":{"rendered":"https:\/\/the7.io\/g-business\/?p=330"},"modified":"2022-02-01T11:39:00","modified_gmt":"2022-02-01T11:39:00","slug":"5-personal-finance-lessons-to-learn-from-the-pandemic","status":"publish","type":"post","link":"https:\/\/kimtimoney.com\/5-personal-finance-lessons-to-learn-from-the-pandemic\/","title":{"rendered":"5 Personal Finance Lessons To Learn From The Pandemic"},"content":{"rendered":"

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5 Personal Finance Lessons To Learn From The Pandemic.<\/h2>\n

COVID 19 pandemic was a wake-up call in several ways. From the personal finance perspective, it reminded us of many things that we were all aware of but hardly cared about. For example the importance of having insurance or living on a budget. It is crucial that we take our learning from it and inculcate in our day-to-day lives.<\/p>\n

Here we will talk about the 5 crucial personal finance lessons that we learned during the pandemic and what should we do to avert such mistakes in the future.<\/p>\n

Here, are the 5 lessons we learned from the pandemic:<\/strong><\/p>\n

Lesson 1:\u00a0<\/strong>Having an emergency fund is essential
\nIn uncertain times, having an emergency fund is a huge financial support. As the name suggests an emergency fund is money kept aside for emergencies.\u00a0 And during the pandemic, it could be a medical emergency to losing your job.<\/p>\n

For example,\u00a0 for someone who has been laid off due to the pandemic, he\/she might be living off their savings if he\/she does not have an emergency fund.<\/p>\n

So, when times are good keep money aside as emergency funds. And it is a good practice to keep at least six months of your expenses aside for it. Also, make sure you count all your expenses including EMIs while calculating this number
\nAlso, do not let your emergency corpus lie idle in a savings account; put it in an instrument that gives you a little more returns, for example,\u00a0Liquid Mutual Funds. Remember, during an emergency, every penny counts!<\/p>\n

Lesson 2:\u00a0<\/strong>Do not rely on your employer\u2019s health insurance plan, get your own
\nDue to the pandemic, a lot of people have lost their jobs. And under such circumstances, if you or any of your family members are required to be hospitalized it would mean paying from your own pocket. This can put you in further financial trouble. Meanwhile, if you have a health insurance policy of your own, it would cover such risk.
\nIt is always good to have a health insurance policy of your own even if you are covered under a corporate health policy.<\/p>\n

Lesson 3:\u00a0<\/strong>We can all save more than we think we can
\nAfter the outbreak of the COVID-19 pandemic, we were forced to stop eating out, shopping, going out for movies, theatre, concerts, etc. And this has given us the scope to save a lot more money.
\nNow, these are extreme situations and it is not normal to go on living like this. Once things are normal again, we will once again start going out and pick up from where we have left. However, it is extremely important that we keep the habit of saving more in the future as well.<\/p>\n

Lesson 4:\u00a0<\/strong>Diversify your investments
\nAn investor with a diversified portfolio not only could ride through a difficult time but could actually take advantage of the situation. Different asset classes perform well at different times and having them in your portfolio means the risks are covered.
\nFor example, gold prices were stagnant for a long time before they started going up last year. At the same time equities were running up when gold wasn\u2019t and then they crashed while gold delivered amazing returns.
\nHowever, how much you should put in each asset class should be a function of the risk you want to take and not on the basis of returns it is generating right now. Plus you also have to rebalance your portfolio whenever any asset class moves up or down and changes the ratio.<\/p>\n

Lesson 5:\u00a0<\/strong>There is no guaranteed future income
\nIf you have a job and are not going through any severe salary cut situation, count yourself as lucky. Looking around, you will realize many of your friends and acquaintances have been laid off and are living off their savings. Do two things act as lifesavers under such circumstances? not having any high-interest debt, and knowledge to live on a budget. And we will tell you exactly why.<\/p>\n