8 brilliant Ways to manage financial stress during hard times
The advent of the coronavirus epidemic has caused both emotional and financial stress to many households. The suddenness of this viral disease has depleted not only a significant chunk of the money in one's savings accounts but have also raised concerns regarding their future, especially those nearing their retirement. Bank rates have sunk to an all-time low while those running their businesses and households on credit face the dilemma of timely repayment. However, not all is lost as a few simple steps can reduce one's financial stress and ensure that they can pay off their essential bills.
Continued lockdowns, business shutdowns, and rising unemployment added to the country's economic woes. Many people face the burden of paying high medical expenses, credit card debts and loans in the face of sudden job losses or reduced payout. If you find it challenging to manage your finances in the wake of a sudden money shortage, you can resort to the following ways to help you reduce your financial stress to get you through these trying times.
Control your expenses:
Not everything is beyond you, which means that it makes sense on what you can control instead of fretting on matters beyond your reach. The first step to tackle financial stress is to take stock of your expenses. It's always best to know where your money is going and what you are spending on. For example, you can start by working on a frugal household budget. Buy what is essential and do away with what you may not need. This is because unless you have etched out a proper budget in your mind, you will find it difficult to control your expenditure, be it a household budget or a planned estimate to spend on other matters.
Additional Read: How to deal with Financial dilemmas?
Find alternative earning ways:
Running a house on a tight budget or limited savings may not be easy and may add to your existing stress. Instead of tightening the strings of your purse too much, you may consider alternate ways of adding to your income. Freelancing is one way to earn some extra money by doing work for your clients at reasonable rates. Though finding new clients for freelancing projects may seem difficult in the current economic environment, it is not that difficult. Get in touch with your former colleagues and bosses, seek references from friends and contact clients through professional freelancers' sites or social media platforms for work. Once you have commenced your freelancing career, you can also ask your clients for references and testimonials to boost your work and give you the necessary financial impetus. You can also take tuitions for children feeling impeded due to online education or serve at old age centres or help look after weakened patients for people ready to pay for your services.
Prioritize essential bills:
- Watch out for bills that may dent your hard-earned savings. If you are concerned about paying off your bills, pay your essential bills first.
- Look at the essential loans and debt that needs to be paid.
- Pay off your recurring credit card debt immediately to get relief from the penalty and monthly interests.
Prioritizing bills may seem hectic at first but will help you segregate between what is essential and not necessary. This will not only help keep your savings intact but also help resolve your financial anxiety.
Watch your savings:
This is true for all, especially those who have access to limited income or dependent on their pensions post-retirement. The first step is to stick to a savings plan rigorously. Times are tough, thus, forcing many people to adopt a risk-averse attitude towards investments. Allocate your money to fixed income schemes or deposit it in bank savings accounts to ensure consistent savings. If you want to earn more, you may keep your money in high yield savings accounts or debentures that make more interest than the bank rate on conventional fixed deposits and other money savings schemes. Keeping track of how much you have earned and saved will alleviate your financial anxiety. Also, it helps you assess your exact financial situation and help you proceed towards your desired financial goals.
Avail moratorium benefit:
If you have a home loan riding on you and finding it difficult to pay off your equated monthly instalments (EMIs), it serves best to benefit from the moratorium period on all bank loans announced by the Reserve Bank of India (RBI). For the unversed, moratorium period is the tenure during which you can seek relief from repaying your home loans. To aid home loan borrowers facing difficulties in paying off the EMIs on their home loans, the RBI had allowed moratorium periods in two batches, the second of which was announced on May 05, 2021. Availing of this benefit means that your credit score will not suffer even as you default on your home loan repayment.
Approach your lender:
Loans and debt, be it of any kind, can be a significant cause of financial burden. This is especially true of credit card bills where the debt keeps mounting on non-payment of the same within a certain period. If you have more credit card bills than you can pay off, it's time to consider the impact on your credit score and financial stability. To avoid this, you can either opt for debt settlement by seeking more time from your lender or resort to debt consolidation by paying off all loans using the amount sought from a personal loan of the same amount.
Be aware of your insurance:
Insecurity has crept into people's lives as they hear news of people reeling under the debt of strenuous medical expenses. If you had ignored buying insurance to date, know that having a health insurance plan or paying for a life insurance policy is essential to secure health and life in the long run. Choose a health plan with adequate insurance cover to ensure yourself from possible health expenses in future. Also, if you are a breadwinner, you must be careful of the potential financial losses and repercussions in the event of your unfortunate death. Remember that insurance only adds to your financial security and, hence, must not be viewed as an unwarranted expense.
Additional Read: Financial Mindfulness on health insurance
Dig into your PF funds:
Agreed that long-term investments, including employee provident fund and public provident fund, are essential to a comfortable life after retirement. The fact that the interest rates on these funds exceed the bank rate that you earn on your savings account is another reason to stay invested in it. However, try to dig into these funds if we face some financial crunch but make sure you don't extract too much considering our financial needs after you retire.
News is rife with many people being diagnosed with emotional anxiety following continued financial stress. Those who had availed money from credit to buy a house or invest in business are now finding it difficult to repay the same. The effect of the pandemic is palpable, with many people complaining of how their savings have been spent on payment of hospital bills and debt instalments.
However, the silver lining remains as not all is lost. Many people are gradually recovering from their illnesses, while others benefit from subsidies and credit given by various government agencies. Many households run on a shoestring budget to date are now experiencing normalcy as the market is gradually opening to new opportunities. Businesses are allowing their employees to work from the comfort of their homes. Emotional security necessitates financial security though it cannot be denied that both complement each other in our daily lives.
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