‘2020’ can be one year which everyone would like to wipe out from their calendar. Everyone were hopeful that this pandemic will end within two or three months. But as time went by everyone realised that’s not going to happen. That’s when the financial ramifications of this pandemic started hitting everyone.
Unless you are in a business related to COVID or essential items all other businesses have been hit by this pandemic. During such difficult times there are Money mistakes which you would definitely want to avoid to avoid further burden on your straining bank balance at the same time saving whatever extra penny you can –
- Money Mistake no 1 – Idle Money – many a times we have money lying idle in the savings account. This money will be earning literally 3.5 per cent per annum which is not even peanuts. Instead opt for a savings plus account which beyond a certain amount like for example in HDFC bank if the balance in savings account is more than Rs 75000 automatically the money gets converted to fixed deposit which when withdrawn will not attract any penalty and you will be definitely be earning more. Even your emergency money which has been kept aside for emergencies need to invested in liquid assets which are easily redeemed but is not sitting idle.
- Money Mistake no 2 – Procrastination – making a financial plan or planning for investments is never very high on to do list. In fact many a times it does not even make it on ‘To do list’. This year with the pandemic its last on everyone’s priority list. The first question where is the money to invest. AGAIN Financial Planning is not for only Rich. Financial Planning is not only about Investments!!! In fact right now the need of the hour is having an adequate plan in place as the future is uncertain and financially difficult. A plan helps an individual to avoid money mistakes and make savvy financial decisions be it about insurances or debts or investments.
- Money Mistake no 3 – Saving but not investing – If you are the person who tries to find deals in everything you buy and save as much as possible but do nothing about it then no point. Say you are saving Rs 50 everyday by making your own coffee and taking it to office. You are saving Rs 1000 per month on just coffee (Rs 50 * 20 days) but if it ends here no point. RS 1000 if invested adequately will earn more money – ‘Compound Interest’.
- Money Mistake no 4 – Pay insurance premium – MAKE SURE TO PAY YOUR insurance premium on time. As in case of any illness or car problems or others in current financial scenario you do not want to shell out cash from your pocket.
- Money Mistake no 5 – Stopping your SIPs/Redeeming your investments – with uncertain times like the recent pandemic investors generally get cold feet. I understand if income or finances are a problem then stop SIPs temporarily but do not redeem them unless necessary. DO NOT redeem your investments unless absolutely necessary. As although you stop investments but your investments will earn for themself – ‘Power of Compounding’.
- Money Mistake no 6 – Fresh loans – it is understandable in the current economic scenario you might think of taking loans. Avoid taking fresh loans as future is uncertain and with businesses closing or slowing down you do not want to be in a situation where you will not be able to pay your loans which in turn will impact your credit ratings. Try to reduce your existing loans starting with ‘Credit cards’ if any.
- Money Mistake no 7 – Expense Management – everyone and anyone is offering deals right now which are tempting. Also, sitting at home for months with no other form of entertainment leads to ‘Depression’ shopping. Am not telling to stop but would definitely insist to try and avoid unnecessary large expenditures. In fact, with expenses on outings being less to almost zero its right time to start saving as much as possible.
As someone wisely said, “You Grow through what you Go through” and this phase shall also pass. People are going to be affected by this emotionally, mentally and financially. The pandemic situation is not in our control but finances are. Avoid the above mistakes and Stay Safe financially.