Covid-19 & your money worries: Tips to handle the impact on your finances

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Published: April 1, 2020 3:30:03 AM

When it comes to surviving financial crisis, focus on what you can control and you can do rather than on what you cannot control or what is not possible to do now

Contact your bankers for your mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates, etc., that they can definitely consider.Contact your bankers for your mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates, etc., that they can definitely consider.

Till now, the impact of the Covid-19 pandemic on the global economy and on various industries are only conjectures and largely unknown. As of now, the top priority is to keep ourselves safe and healthy but financial concerns also exist in our minds. Everyone has queries on whether it is the beginning of a global recession, what happens if the recovery is slow, what about the investment portfolio they hold, how to manage bills, etc. Let us discuss how to prepare yourself financially and keep calm in this time of crisis.

Do your daily routines
One essential point is that you should not miss your daily routines. Get up at your regular time and stick to your routine. If you lose your routine, it affects your eating habits such as missing breakfast, stopping cooking or eating snacks and other items instead of having proper meals. As most of you are on work from home, take up some form of exercise. It could be simple jogging around your housing complex, yoga inside your home, even simple ground exercise within your home, etc. Because, doing any type of physical activities definitely improve your mood especially when you are feeling low.

Control your emotional triggers
Identify your emotional triggers and make an attempt to control the same. For instance, owing to the given situation, you may be thinking of selling some of your investments which you had planned for a long term or for a specific purpose in mind. Whatever it is, do not let your emotions take over. Owing to the current lockdown, people have started placing orders online for essential supplies, and may even end up overbuying the same. Note that this may result in financial constraints as you end up overspending.

Keep abreast of news
Each day brings tons of new information through social media. But, ensure that you are getting information from reliable news sources and keep yourself updated on what government, bankers, employers, etc., are doing in response to Covid-19 which will have a financial impact.

Stay up to date, but take adequate breaks. One cannot digest all information, whether good or bad, at any given point of time. Given a choice, use less social media and look for good news stories to balance out the bad.

Contact your bankers
Reserve Bank of India (RBI) has already announced the mortarium on payment of loans during the next three months owing to Covid-19. Contact your bankers for your mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates, etc., that they can definitely consider. What they offer you depends on the type of help that you ask and your payment history, credit behaviour, etc. Defaulting on your obligations because you did not reach out for help from bankers will have a worse effect. Your credit rating will resume when you catch up with your timely payments.

To conclude, when it comes to surviving a financial crisis, focus on what you can control and you can do rather than on what you cannot control or what is not possible to do now.

The writer is a professor of finance & accounting, IIM Tiruchirappalli

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