Personal Finance Trends in Covid Times: How you can save, invest and spend better

While a pandemic is unlikely to occur on a regular basis, but its occurrence is still possible, and hence we should have an emergency reserve of at least three months’ worth of expenses.

The biggest threat a person can have in life is loss of regular earnings. The pandemic has showed us everything, right from people losing their jobs to total shutdown of businesses. We’re suddenly witnessing a new jolting era where employees are settling for significant pay cuts, while business houses from big conglomerates to small enterprises are facing an unbelievable standstill.

Household savings, on the other hand, have witnessed a huge uptick from the day the country went into the quarantine mode. Whether you’re a miser or a money burning machine, the lockdown has prevented everyone from spending anything beyond the basics. Everyone’s expenses have come down to rent, salaries, EMI and basic necessities. Though this may sound good for people who have managed to survive their business or hold on their jobs; but this would mean blood bath for businesses which rely on consumer demand. If you think the effect of it will end there, then you have highly mistaken! It will eventually come down to our jobs! As this will directly affect the ability of these business to pay salaries and create jobs by expanding, creating a negative spiral.

With respect to investing, a lot of money eyes turned towards the stock market this year as the market saw an astonishing V-shaped rocket recovery; while the interest rates offered by banks kept going down. Households with a surplus have kept their money in the bank to meet uncertainties, while those with enough wealth to explore investment opportunities made sure they took advantage of the market’s decline.

While many individuals have a rigorous attitude to investing, the Covid-19-led disruptions may serve as a wake-up call for others to strengthen their finances.

4 strategies to keep you all set for the next pandemic:

Increase Saving percentage

I understand we all wish to live a flamboyant lifestyle, but a pandemic of this magnitude has forced us to preserve a bit more than we use too. While we eventually will restore all of the additional expenditures we had before the epidemic such as vacations, shopping, parties, and so on, it is essential to remember that there’s no assurance that a catastrophe of this scale will not hit us again. Therefore, spend but wisely.


We saw it with our own eyes that in this pandemic, nothing seemed secure, from a private bank seizing savings to fund houses closing down to the stock market collapsing, demonstrating that no financial product is risk-free, it’s just different forms of risk. The epidemic served as a reminder that our money has no safe harbor. The fact is that each investment has some risk, and you must determine which dangers you are willing to accept. The amount of money you put into each asset should be determined by the level of risk you are willing to accept, not by the present return it is generating.

Emergency Fund

While a pandemic is unlikely to occur on a regular basis, but its occurrence is still possible, and hence we should have an emergency reserve of at least three months’ worth of expenses. The main argument here is that what if we lose our employment or our business goes bankrupt? As a result, this emergency money will come in useful as you look for a new employment.

Never Panic in heavy corrections & make use of it

When investments become more volatile, investors may be tempted to sell as they may perceive things could worsen. And, we have witnessed exactly that the market initially fell like pinballs in the month of March 2020, Nifty50 fell from 12400 to 7700. But today, in a span of fewer than 18 months, it is touching an unbelievable high of 18000. Only investors with the necessary risk-taking capacity, both financially and emotionally, can deal with such volatility. In fact, every responsible and smart investor should use such opportunity to invest if it can afford.

We may forget about the Covid epidemic in a few years. We may refer to it with relief rather than fear. Even financial lessons learnt may be forgotten, and we may go back into previous behaviours. However, I’m sure a lot of us might alter our ways when we remember faces of the known people who faced jobless and homeless nights because of the catastrophe. That is how crises work. It’s like injuries, it leaves a scar which never fades away!  And the scar here is FEAR!

(By Sahen Karamchandani, Chartered Wealth Manager)

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