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NAVIGATING FINANCES DURING LOCKDOWN

Updated: Oct 14, 2020




The last few months have been traumatic for all of us, as we watched the onslaught of the COVID-19 Pandemic and the way it has affected every bit of our lives. We have also been watching the misery of the exodus of migrant workers across cities and states in India. The spectre of an economic downturn has become a real threat to all of us in every age group and every occupation. 


The word of God in II Timothy 1:7 (NKJV) says “For God has not given us a spirit of fear, but of power and love and of a sound mind”. As followers of Christ, we are told not to fear but operate with a sound mind.


It is in this context of the pandemic and the impending economic downturn that I thought we should focus on "Financial prudence".


We may not be in a position to go all out, seeking to increase our income now, as none of the businesses will have the cash to spare. So in a nutshell, we need to manage with the available resources. It is nothing but prioritising between needs & wants. 


We hear news of rising unemployment & pay cuts, which can be quite shocking and disturbing, but on the other hand, I also read a recent news article that says Large screen TV models have shown three times more sales!!


In my view, most of these purchases would have happened on "Buy now-pay later" mode, which again, is a bad idea because it adds to our liability and overall financial stress.

WFH (Work from home) has become the new norm. Earlier, it was mostly the Technology companies that had this flexibility but now I see even the financial fraternity- bankers, fund managers, insurance executives, and others etc. operate more efficiently from home. 

As a whole, this work model will save money not only for corporates but also for individuals. In addition to monetary savings, we can utilize time & energy more efficiently towards spiritual, self-improvement, personal health & family activities. 


Now coming to cash-outflow, most of us have EMI commitments towards home loans, cars, etc., Though banks offer the benefit of a moratorium to defer the EMI payments, I would suggest not to utilize the same, but to honour the EMIs as usual. The reason is that when we defer the payments, tenure gets extended & interest is charged on the outstanding amount, whereby we pay much higher overall interest cost. Hence this is the first cash flow item that needs attention. Next is insurance premium payments, especially health & life cover should never be ignored. These are the safety nets! Keep them intact. 


Coming next to the most essential, household expenses. Food, general groceries, clothing, pharmacy expenses, miscellaneous maintenance expenses, payments towards electricity, internet, mobile, DTH, are all part of this list. The list is never-ending. All of the above can be well managed, provided we are prudent on how every rupee is spent. We as a family follow a written monthly budget. This has helped us to sail through during economic downturns, especially the 2008 global financial crises.


I sincerely suggest you follow this method, it is great to know "what we earn & where it goes". It will help us to block the gaps and our spending pattern will change. 


Now coming back to my list of essentials, the current COVID situation has taught us to live with what we have. For example, provisions & groceries can be optimally used and food wastage can be stopped.


Whether we work from home or if the job demands we go to the workplace, let us put in our best to deliver what is expected. Our God honours honest hard work.


I also wish to talk about savings. We read about Joseph in the old testament, who suggested such a smart-saving strategy: "Then Pharaoh should appoint administrators over the land and take one-fifth of all the produce of the land of Egypt during the seven years of abundance" (Genesis 41:34). 


This gives us a fair idea that 20% is a good portion to set aside from our monthly earnings, which will come in handy as savings for a rainy day. 


Personal finance is often neglected because it looks like a complicated subject. In reality, it is not! All we have to do is allocate some time to plan. 


In summary, have a written budget, say no to credit card spending, a big NO to loans except for an existing home mortgage and start to save and invest now- even if it’s a small amount that is okay. Never wait for the ideal time to start saving, it never comes. There is always a new commitment that keeps getting added.   


A monthly systematic investment plan is the simplest way to start off.


As a Christian, one last thing I would like to touch on is tithing. If you have been tithing regularly, continue to do so. If you have not been tithing or tithing irregularly, this is the time to start it as a Godly discipline. Proverbs 3:9,10 (NIV) says “Honor the Lord with your firstfruits of all your crops. Then your barns will be filled to overflowing and your vats will brim over with new wine”. 


Take care, stay safe. 

“You must gain control over your money or the lack of it will forever control you.”

~ Dave Ramsey

Contributed by DANIEL S

(Financial Advisor and Consultant,RBM Investments Services)


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