Given the economic uncertainties caused by COVID-19 and the extended lockdown, financial worries have increased. During these uncertain times, it is very important to assess the current financial situation and gauge the long-term impact on our personal finance. Often, a few small steps can help you stay ahead. 

Here are some common areas for financial concerns that may come up. 

Late or missed payments

Late payments are one of the major financial concerns among individuals. You can always look for better ways to simplify the financial responsibilities. To avoid late payment charges, you can opt for an auto-pay method. If you do not have enough money in your account to auto-pay your EMIs, call your bank/lender and renegotiate the terms of payment and increase the tenure of your loan. 

Need vs want

During any crisis, there is a big conflict between needs and wants. It is always advisable to spend more on necessities and control one’s spending on non-essentials. The best way to solve this is to evaluate what is extremely important to buy and cut off spending on luxury items and unused subscriptions or memberships. Maintain a strict budget and use an expense tracker app to keep your overall spending in check. 

Increased debt

During a crisis as a result of individual or household consumption personal debts are increasing. Credit card debts, auto loans, home loans and student loans, among others, have huge interest rates and over the days it becomes difficult to repay them. Many financial institutions are authorized to take legal actions for debt recoveries. Many individuals do not want to be a prey of legal actions.

Lack of adequate emergency funds

It’s prudent financial advice to accumulate an emergency fund that can last for long and benefit during any crisis. It depends on the financial obligations of each individual. Managing the budget is not an easy task and if done properly one can eliminate debt cycles. It is important to identify what needs the most attention and accordingly figure out the plan of action.