4 Money Mistakes to Avoid During the Coronavirus Pandemic

With delayed salaries and job cuts on the horizon, here are four money mistakes that you should avoid during the COVID-19 pandemic.

Markets have corrected sharply over the past couple of months due to the pandemic with gains made over the years swept clean. There are high chances that most of your investments, particularly equities, would be in red at this point. However, you must not panic and exit as doing so would turn your notional losses into actual ones.The pandemic has spared none and even the most robust stocks have taken a beating. If you have made sound investments in quality stocks, staying put now can reap rewards in the long run. Exiting with the hope of returning when the markets rebound can result in missing out the rally.

This is another money mistake which you must avoid. As most people are facing liquidity issues, the Government has allowed withdrawals from the Employees’ Provident Fund (EPF). EPF is a vehicle to build retirement corpus which would take care of your post-retirement needs.However, if you dip into this to overcome liquidity shortage, there are chances of missing out on the power of compounding, which helps you build a sizeable corpus. If you have enough liquidity, it’s better to keep this corpus untouched.

The Reserve Bank of India (RBI) announced a loan moratorium of three months to help borrowers in times of the COVID-19 pandemic. However, it’s better to avoid going for this option if you have sufficient liquidity to pay your EMIs.Note that a loan moratorium doesn’t mean a waiver and the EMI keeps getting added to the outstanding amount which can result in a higher interest outgo. Therefore, opt for it with due diligence.

During the pandemic, it’s essential to curb binge spending. Not doing so can further land you in a soup and lead to monetary problems.Therefore, make sure to identify your wants and keep a tight lid of them. Prepare a budget and spend only on absolute needs. This would keep you afloat during trying times. In conclusion Financial discipline coupled with due diligence can not only help you overcome cash crunch but also you tide the crisis with gusto.

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.