Undoubtedly, this year has been a game changer for many of us. Our plans, be it financial or personal or professional have been altered to suit this new way of life thanks to the pandemic that’s taken the world by surprise.
An unfortunate fallout of the times is job losses across the hierarchy. Senior, middle and junior managers, many found their jobs in a vulnerable position as demand slowed and some businesses even pulled their shutters down. With the pandemic not showing any signs of slowing down in India, replacing their old job with a new one is going to take some time.
The focus in such uncertain times needs to be solely on maximising cash balances to be utilised in the absence of income and a well-drawn. At the same time, as long as possible, don’t break into the accumulated .
Here are three things you can do to build cash savings without endangering your long-term wealth creation immediately.
1. Get rid of the non-core
Dig into your files and you will come across expensive insurance policies and assets you own but don’t need. An expensive insurance policy is usually a traditional plan which promises you money back at the cost of a high premium and a low death benefit. These help no one because the cover for the contingency of loss of life is extremely low and at the same timeis also low. Just stop the policy or surrender it, even if it means not getting much back. Paying that expensive premium is a burden you don’t gain from.
You may also have oldor savings schemes which can be redeemed and retained in cash. It’s also a good time to get rid of the excess gold lying in your locker. Loss-making, poor quality equity stocks are worth giving up and booking losses in. All this will help you monetise assets which were anyway not going to give you a significant return.
2. Reduce the luxury
There is, of course, no easy way to mobilise cash, one of the things you have to do is get rid of the frills. This might mean selling that second car (or even your only car) which you have on a loan. The stopping of the monthly loan repayment will immediately boost cash flows. Also, you can look at reducing the spend on your household staff, try to do more of the housework by yourself.
Reduce expenditure on subscription-based entertainment, gaming apps or media, you’ll be surprised at how many you have and how much you can save. In times such as these where uncertainty about the future is high, focus only on living a simple life and saving as much as possible.
A good health plan will help you save on any potential large expenses that come in the event of hospitalisation. The savings you may have otherwise put aside for this purpose can be invested well or used towards other emergency expenses.
3. Get yourself insured
If you don’t already have a suitable health insurance plan, then get one for yourself and your family. Losing your job means that you won’t have the health cover from your organisation and it leaves you and your family vulnerable to large spends in case of hospitalisation. Needless to say, this is possibility that can’t be overlooked. A good health plan will help you save on any potential large expenses that come in the event of hospitalisation. The savings you may have otherwise put aside for this purpose can be invested well or used towards other emergency expenses.
A bit of care and mindful management can help you tide over this period of uncertainty with enough cashflows to last out a few months. After which you will have to start thinking of alternative ways to restart the income flow.