5 Smart Ways of Managing Money in a Crisis


The Coronavirus has hugely affected people’s finances and turned lives topsy turvy. There are EMIs and house rents to be paid and due to an economic slowdown many have been laid off or have been made to take a salary cut. Even if you are among the few lucky ones who have been earning regularly, now is the time to plan smartly and save money for unforeseen circumstances. Who knows, there could be a further drop in income in future.  Dipika Jaikishan, co-founder and COO, Basis an app-based platform that helps women achieve financial freedom through supportive communities and expert advice tells us ways to manage money better.

1. Look out for an emergency budget

In the current situation, if you have lost your job or are living on a reduced salary, you need to assess how you can make tweaks to your lifestyle to immediately save money. “Think of it as having and executing an emergency budget,” says Dipika. She suggests you take the following actions:
1. Hold cash reserves for buying groceries, vegetables, milk, from the local stores in case digital payment modes might not be available.

2. Secondly, cut down on unnecessary expenses. Buy essentials as you may need but do not hoard unreasonably.
3. Thirdly, review your monthly memberships, like a gym membership, online streaming platforms, DTH subscriptions. Cancel or freeze unnecessary memberships which you won't use during the lockdown.
4. Check on your emergency funds progress in case you may need it.

2. Assess your job and income

It’s essential to do a SWOT analysis of your career and income. Dipika advises that you assess whether your current job would still be there once the lockdown lifts or you need to look for other opportunities. If there might be pay cuts, and you should prepare for the same. Assess whether you are up for appraisals and can you expect any bonus this year.

“You need to know the income flow in the coming months to have a clear idea of your finances. In case you anticipate a layoff, use the many opportunities available online to upskill yourself,” adds Dipika. 

Even if your job is not under threat, any new acquired skill will help you perform better in your current role, and it may give you an option of a side hustle.

3. Negotiate your liabilities

 If you lose your job or if there’s a sudden crash crunch due to any unavoidable situation, you need to communicate the same to your landlord (if you are renting for home or business) for a waiver and banks to negotiate a better interest rate(if not a waiver) for any loan that you may already have.
“If you have existing loan EMIs or credit card bills and do not have a cash flow problem currently, pay them without default. A default would incur additional interest accumulation, which would put an unnecessary burden on your purse strings,” says Dipika, adding,”when there is uncertainty over income, new loans for large non-critical purchases are best put off.”

4. Invest if you can

If you have existing SIPs, continue them. Dipika advises that If you can then start new SIPs, so that you can maximize your wealth in the long run.

5. Ensure your health insurance coverage is adequate

Many tend to skip it thinking they mayn’t need it in the near future. That isn’t advisable. Dipika cautions you shouldn’t compromise or cut down on a good health insurance plan. Ensure you have Rs 5-10 lakhs of cover, since medical expenses could really add up. “While you may feel you are never going to need it,  medical insurance has a purpose, to provide for your health care without throwing your life into a financial jeopardy,” adds Dipika.

The mantra to keep in mind while faced with a crisis is to focus on things that you have control over, this will help you stay stress free rather than worrying about things not under your control.