Albert Einstein had once said that “In the middle of difficulty, lies opportunity”. Most of the country was facing the difficulty of an enforced lockdown due to Covid-19. However, this also gives us the opportunity to determine ways to manage our finances better, which could be useful even after the end of this pandemic. Here are some smart ways of managing your finances during the pandemic.

Build and Adjust Your Budget for Reduced Income

If you don’t have a budget, now is a good time to put one together. If you’re facing a significant reduction in income due to the COVID-19 pandemic, then track your expenses carefully and make an emergency budget. If you already have a budget, consider reviewing it to see if you can pare it down and reduce your expenses further. Take the advantage of all this time and implement a no-spend challenge to help yourself save on discretionary expenses. A great model for your monthly budget is the 50/30/20 rule. 50% of your income should go toward things that you need (E.g. Food, rent, education, EMIs etc.), 30% on things that you want (E.g. Restaurants, movies, non-food shopping, travel etc.) and 20% allocated to savings and safe investments.

Stay Safe and Be Aware of Scams

Unfortunately, even during a worldwide health emergency, scammers are trying to take advantage of the situation. With so many individuals anxious about the state of their health and finances, many are susceptible to frauds around COVID-19. Be wary of any unsolicited emails, phone calls, or other communications, especially ones that request donations or sensitive information. Do not give out any of your personal information to unfamiliar individuals or businesses, and don’t fall victim to text message scams that ask you to get your money by clicking on a link.

Develop a frugal mindset

Develop a frugal mindset in all thing and identify ways you can save money. Identify the credit cards/online payment services that give you the best cash backs or rewards and use them as a priority. Purchase non-branded clothes & accessories, which tend to be of similar quality to the expensive brands.

Shun debt like a disease

First, prepare to become redundant or underpaid. When no one is producing goods or services, jobs are next on the line. Prepare mentally for a period of possible unemployment. Consider skills to acquire, plan to keep cool and collected. Second, shun debt like a disease. Do not borrow, even from friends and relatives. Do not use that credit card if you can. Pay it in full always if you do. Switch to the debit card until this crisis blows over.

Make a mental list of assets you can liquidate

Make a mental list of assets you can liquidate if needed, even if it is at a loss and a lower price. It could be your gold, the property you bought as investment, your equity or fund holdings, or those works of art. Know what the pecking order of access is if you need money. Don’t worry, you can buy them all back when times are good. But you should know what you will give up. No, don’t take loan against assets. Also be willing to trade off some long term for the short term. You kept that money aside for retirement. But if you are faced with loss of income and have to access it, do that instead of borrowing, or selling something cheap.

Keep your eyes and ears open to new opportunities

Keep your eyes and ears open to new opportunities to work and do something in addition to what you are already doing. A crisis is a time to figure what is newly needed in the changed environment and how you can plug your skills in. No one thought that delivery boys and warehouse operators will thrive in the online retail boom.

Diversify your income

Decreasing expenses is part of a crisis budget, but also look for any way to increase your income. In addition to building your skills and consolidating your knowledge, think about how you can leverage those skills to start a side hustle, monetize your expertise, and diversify your income sources. Giving online tuitions, conducting hobby classes or teaching a foreign language are some examples. There are many freelance sites that you can access to help you with this. You just have to take some time out and work on your supplementary income.  The definition of normal is likely to change post the lockdown. Take this time to ensure that you prepare yourself financially for what the new normal will be.