“If you fail to plan, you are planning to fail!” ~ Benjamin Franklin

Pandemic gave a wake-up call to us, highlighting the importance of having Insurance or living on a budget. In this article, I have penned down crucial life lessons that I learned during the ongoing Pandemic and what we should do to correct the path and avert such mistakes in the future.

Personal budgeting and planning are essential throughout life to align the family’s short, mid, and long-term needs. It starts with spending less than your earn to save and invest for future financial goals. In an age of aggressive consumerism, pushy aggressive marketing for products and services make it very easy to fall into the trap of instant gratification for either possessions or experiences. Your Short-term financial decisions can hurt during crises, and if consumer credit is not minimal in your portfolio, it may hurt even more

#Lesson 1: Protect your loved ones; Insurance comes above everything else

It would help if you always had a safety net; Life insurance provides financial security in case of the unthinkable. It can help pay off your debts, fund your children’s education and help your family maintain their current standard of living in your absence.

Insurance is a powerful tool to hedge against unfortunate events in life. It should never be confused or mixed with investments to get returns. Being insured for term, health and personal accident, critical illness is not optional, especially for the sole breadwinner in the family. It brings mental peace of mind to you and instils confidence in the family to face life adversities.

Do not just rely on your employer’s health insurance plan; get your own

Employer-sponsored group insurance policies protect you when you are employed; in the mid-Pandemic, millions of people lost jobs, leaving them exposed during the time it was most needed than ever, under such condition if you or any of your family members required hospitalization, it would mean paying from your own pocket. This can put you in further financial jeopardy. It is always good to have a health insurance policy of your own, even if you are covered under a corporate health policy.

#Lesson 2: Building contingency or emergency fund comes before investing

We all need access to liquid savings for emergencies; as the name suggests emergency fund is money kept aside paying for EMI’s, utility bills, education fees for children or insurance premiums etc. even if you lose your job or other income streams, It ensures that we do not get in loan trap when no guaranteed income is there.

Remember, during an emergency, every penny counts! so in good times, save for those rainy days and keep such funds readily accessible in the bank or liquid mutual funds with an instant redemption option

Most advisors suggest contingency funds for 3–6 months. Still, depending on your Income stream, debt load, career field, and family situation, having more than six months of living expenses in a liquid saving account may help you sleep better at night.

#Lesson 3: Minimalism — We can all save more than we think we can

We were forced to stop eating out, shopping, movies, theatre, stadiums, concerts, travels, foreign vacations, etc., causing us to save a lot more money during the lockdown. This happened under abnormal situations, and it is not customary to go on living like this. Once things are okay again, we will once again resume from where we have left.

Avoid consumer debt to Fund Your Lifestyle!

However, we must keep the habit of saving (and investing) more in the future. Keeping a low debt-to-income ratio is essential regardless of income level. One can follow the 28/36 rule for guidance

#Lesson 4: Diversify Investments and rebalance your portfolio

Different asset classes perform well at other times, and having them in your portfolio means the risks are covered. diversification reduces risk and helps take advantage of the situation across different market cycles

For instance, gold was stagnant for a long time, and equities were running up. Then markets crashed while gold delivered incredible returns.

Check your Risk Tolerance! Not putting all eggs in one basket, healthy asset allocation in each asset class as per your risk appetite should be done, and periodically you also have to rebalance your portfolio whenever any asset class moves up or down and changes the ratio of risk

#Lesson 5: There is no guaranteed future Income

Consider yourself lucky If you are still breathing, have a job or running the business and are not going through any severe haircut in income, Looking around, you will realize many of our friends and acquaintances have succumbed to Covid-19, been laid off from jobs, had salaries reductions, businesses closed and are living off their savings.

With no guaranteed or reduced income, two things act as lifesavers under such circumstances — not having any high-interest debt and knowing to live on a budget.

· Debts can drain you: credit cards or personal loans are harmful to your financial health in regular times also. Even if you are using a credit card, spend as much as you can pay by the next month to avoid the circular debt trap.

· Living on a budget: With job losses and severe pay cuts, we were all forced to live on a budget for our basic needs rather than wants and desires. Suppose you have always been following a budget. In that case, the changes are more accessible to adapt than someone with an immense extravagant spending habit.

#Lesson 6: Estate Plan, Will, Nomination formalities cannot be delayed

More than 3.5 million lives have been lost already to Pandemic, teaching us some financial decisions cannot be delayed. While saving and investing is essential, the nomination filling of those assets is equally vital. Your family is dependent on you financially. You need to ensure that your savings and investments get directly transferred to them without going through the hassles of much legal or institutional paperwork.

There is no better time to prioritize your nomination fillings. While working from home using the convenience of the online services, update your nominees. After the lockdown ends, get to making your legal will also, if possible. Ensure that your loved ones have access to your information about your saving, investments, nominations and will document

Have you created an emergency binder to share all the information someone will need to know in your absence?

It doesn’t matter if you’re single, married, have no children; if something unfortunate happens to you, someone else will need to know specific information to manage the worst-case scenario.

#Lesson 7: Manage your emotions and Impulsive actions

It’s certainly easier said than done. Even those generally “calm, cool, and collected” can let their emotions take over during times of significant stress. Making decisions based on emotions rather than logic and practical information can threaten your finances and retirement.

Short-term money moves can seriously impact your finances and long-term investments like retirement planning. Panic selling of investments like Mutual funds, stocks usually don’t end well for your financial scenarios.

And spending money from a savings account on an impulse purchase can cause havoc if you suddenly lose your job and no longer have the income to support your monthly budget.

#Lesson 8: Health is Wealth, both Physical and Mental

If you’ve been putting off improving your physical or mental health now more than ever, you need to stop procrastinating. Improving your nutrition and fitness level can help you feel better, lose weight, and significantly better your health by improving your immune system and aid you in avoiding chronic health conditions such as diabetes, high blood pressure, or heart disease.

Additionally, it may help lift the mental fog, alleviate mild anxiety or depression, and relieve the stress of never switching off while WFH.

Just like avoiding managing your Insurance and finances can hurt your financial health, ignoring your diet and activity level can harm your physical and mental health. Plus, focusing on prevention (wear masks, social distancing and getting vaccinated) can save you a great deal of money and add years to your life!

#Lesson 9: Virtual is a new reality. Remote work also works well.

The gig economy is here to stay and grow, Humans are adaptive, and life is more flexible than we think. Many companies resisted remote work — until they had no choice. Now, some plan to allow their employees to continue to work remotely even after the Pandemic ends. Even when we can move more freely with vaccination passports, we may prefer doing more from home.

“Most industries going forward will be hybrid industries with the hybrid strategy that incorporates digital experience at some level.”

Already, many more people are studying virtually online, shopping online, video conferencing with friends and family, using delivery services, seeking health care through telemedicine portals and paying with apps instead of cash or cards. Virtual conferences among diplomats and webinars replaced events and summits. Virtual tourism has opened access to people who might never have shown up in person.

#Lesson 10: The world is actually a Global village.

In times of globalization, when a big economy like China sneezes, the world catches a cold; we often think of each country as a separate geographical, political and cultural entity and being very different from one another. Within a few months of the coronavirus being first identified, it spread to nearly every country, and a global pandemic was declared.

Despite the differences and distance between places, we are battling the same virus and struggling. It’s a reminder of how the world economy and society are interconnected on many levels, including supply chains, communications, technology and travel.

#Lesson 11: There is kindness and humanity, even in the darkness.

At the pandemic outbreak, there was a shortage of PPE, Ventilators. Immediately, society members gathered together to procure and hand sew masks and scrub caps for health care workers. Restaurants donated food to hospital workers, hotels transformed to quarantine centres. And people were volunteering to feed the marginalized sections of society.

In the second wave, strangers are helping in dignified mass cremations, and religious bodies organize Oxygen langer and life-saving medicines. These acts of kindness and care from society has restored my faith in humankind.

Take Away

Financial planning, discipline, and prudence are required to sail through during uncertain times. Being financially prudent is not something impossible. All you need is to be a little more organized with your day-to-day finances, have healthy saving habits, invest wisely in different asset classes, and get adequate Insurance.

“Expect the unexpected.” Even the most brilliant economic experts in the world couldn’t have predicted this financial crisis. Yet here we are.

And while we may never deal with this same kind of crisis again, unexpected events will always be a part of life. But by building up our emergency savings, living within our means, and diversifying our income, we can better protect ourselves against whatever challenges life decides to throw our way.