4 Financial Habits to Get During This Lockdown

While COVID-19 has impacted the economy, on the brighter side, the lockdown has reduced your discretionary expenditure at shopping malls, restaurants, movie theatres, and travel expenses. Financial management, even though crucial, always takes a backseat in the daily hustle between home and work.The lockdown has eliminated commuting hours to work, helped you cherish quality time with your family and also pursue new skills for self-improvement. However, this downtime can be effectively used to understand your monthly expenditure and plan your finances. Imbibe these four financial habits during the lockdown to equip yourself better for life post lockdown.

As a beginner, you may have started investment in few funds but might have expanded your portfolio over the years. During the lockdown, assess your portfolio to gauge whether you have over-diversified your portfolio. It’s challenging to keep track of multiple funds, and also you may not benefit with over-diversification of the portfolio.Try to maintain around five funds to ensure better management. Limit the number of funds by filtering out those that have showcased an inconsistent performance over a longer period. Recheck your asset allocation between equity and debt that may have drastically changed with the market decline. Seek your financial advisor’s help for portfolio rebalancing.

Many are retracting from investing in these times when the market is witnessing a steep decline. Contrary to this belief, you can benefit from investment in good quality stocks during the lockdown. If you are in a financially better position with sufficient savings and have a risk appetite to face market vagaries, then you can make optimum use of equity mutual funds.Also, don’t let the market decline stop you from investing in equities. Similarly, don’t be swayed by the market volatilities and engage in hasty sale of stocks.

Directing investments towards a specific short-term or long-term goal is one of the crucial financial habits. Majority of us keep tax-saving planning at the last moment and purchase investments without much thought on how the returns will benefit us in future.Investment is the vehicle to reach your goals such as buying a car, planning an international vacation, medical insurance or retirement. A goal-driven investment instils discipline and helps in better utilisation of your savings.

Regardless of equity or debt, your investments need time to grow and bear returns. While you may be tempted with short-term profits from the market rise, it’s wiser to have a long-term approach and stay invested for better wealth creation. Add diligent and patient investment to your list of financial habits.To conclude, the ongoing crisis has taught everyone the importance of savings and emergency funds. In such an unforeseen crisis, you need to have cash-flow for next 8 to 12 months. Use this time to check your finances and acquaint yourself with taxation modifications, if any, implemented in this year’s budget. The financial habits mentioned above and a curtail on expenditure will ease your life.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.