'Like sanitizer is to covid, life insurance is to financial distress'4 min read . Updated: 13 Jan 2021, 02:22 PM IST
Here are some activities to get financially fitter in 2021
By Mohit Goel
There is a good chance that 2020 did not go the way you had planned it. But, 2020 did teach us life lessons like never before. The COVID-19 year changed our priorities with health, family and life taking precedence over everything else. We all faced changes in the way we live, view simple things and most importantly opened our eyes to our finances.
The upside of 2020 was that finally many of us started to take our lives and health a lot more seriously. The health scare made us imbibe several habits that today are second nature; the inspiration from 2020 is to develop good financial habits for a healthy financial life. Our 2021 philosophy should be to #GetFinanciallyFitter, and by relating to post Covid habits that we have all developed, they can be used to improve our financial lives.
Also Read: What's got Indians excited about Covid shot
These are some of the things that we should follow to get financially fitter in 2021
Screening = Net worth
People who have a recurrent cough, cold and fever may have symptoms of COVID-19 and would need to undergo screening to check if they are positive. The outcome of the test result decides the next course of action for such people.
Similarly, you could test your financial condition by screening your income, expenses, savings, investments, insurance and debts to arrive at your net worth.
#GetFinanciallyFitter: Use online resources to check your credit score and net worth by inputting your financial details to know how fit you are.
Sanitizer = Life Insurance
The adage “Prevention is better than cure" is even more vital in these times. We have cared about hygiene with regular washing of hands with soap and using hand sanitizers. Ideally, frequent washing of hands is a good hygiene practice, and one shouldn't wait for a health advisory to get one to act.
Insurance does what sanitizers do; they protect our family's financial interests. You could use the additional time available these days at home by collating all your existing life insurance policies to evaluate your risk cover.
#GetFinanciallyFitter: Use online resources to check how much life insurance you need after accounting for existing insurance and consider bridging the deficit.
Face mask = health insurance
Long before the face mask became a necessity, as a COVID-19 precaution, it was being used by people in the healthcare sector, patients and people facing breathing trouble due to pollution.
Good health is a must for our optimum functioning, but we cannot ignore the rising incidents of health-related ailments and lifestyle-related health issues. The increasing costs of health care have made health insurance unavoidable. If you do not have health insurance, now is the time to get one.
#GetFinanciallyFitter: Create your mask with the right type of health insurance with a significant scope that would be useful to address varying healthcare risks.
Quarantine = Household budget
We are all facing self-quarantine of some form or the other. The upside of staying at home with family is reducing discretionary expenses at the mall and online.
If you have followed a household budget, you may witness a spike in your savings, which should be put to good use.
#GetFinanciallyFitter: Use a digital resource or paper budget sheet to develop a family budget; track where the money comes from and where it goes. Explore ways to cut expenses to save more or reduce debts for a healthy financial life.
WFH = Savings
Several job skills are finding new ways to adapt to the new normal– school teachers adapting to digital teaching aids, technology teams working from home and even doctors taking video calls to diagnose and treat illnesses. You could use the opportunity not just to clean up your house and discover what to keep and what to let go; you could also find the money.
#GetFinanciallyFitter: Don't use the time for just spring cleaning your house; use it to spring clean your finances; you may land up finding investment you had forgotten about or the currency notes you had stashed away for safekeeping.
Social distancing = Debt control
Social distancing is the practice of staying away from gatherings and maintaining a safe distance. It is a situation which you could learn from and control your spending habits, particularly if it results in borrowing. By managing your debt and reducing it or staying away from it, you are less likely to be impacted financially and maintain a healthy credit score.
#GetFinanciallyFitter: If servicing debt is getting tough; you may be in a better situation by talking to your lender to rework on your loan repayment given the uncertain future.
Pandemic = Stay Invested
COVID has been classified as an epidemic and pandemic, as it spread across the world, impacting all of us. Time and patience will not only help us tide over this but will also be beneficial for successful long-term investors. Stay invested in your financial goals that are 3-5 years ahead.
#GetFinanciallyFitter: Use this opportunity to review your asset allocation and consult with advisors to help you rebalance your portfolios.
Covid Relief Fund = income tax
The public contribution is necessary to fight the financial implications of COVID-19, and the Government of India and State governments have asked for people to donate in these challenging times liberally. Corporate India is contributing, and so are individuals.
The income tax and GST that you pay are also used in its small way towards maintaining people's lives and the country's infrastructure.
When life offers you lemons, make lemonade! Let’s utilize the terms made popular by COVID-19 to our advantage as a reminder to get financially fitter.
(The author is the Co-founder, Chqbook. Views as expressed by the author.)