How to Manage Your Finances in Times of Salary Cuts Due to Covid-19

How to Manage Your Finances in Times of Salary Cuts Due to Covid-19

The COVID-19 pandemic has brought enormous losses to the $2.8 Trillion Indian Economy. If experts are to be believed, only a quarter of this economic size is functional at the moment due to lockdown, which is in the third stage starting from March 25, 2020. Analysts have estimated losses worth INR 32,000 Crore every day from here on till the lockdown is over. Economist experts have pegged India’s Gross Domestic Product (GDP) to be around 1%-2% in the financial year 2020-21 due to lockdown. They even fear a 0% GDP if the problem deepens more.

As COVID-19 cases near 50,000 and are showing no signs of abatement, the lockdown may well extend beyond May 17, 2020.

All this has mounted concerns for India Inc and most companies have now resorted to either salary cuts or have laid off their employees, causing problems in the daily life of the salaried class. So, if you are witnessing salary cuts, it’s time you change your routine to get through these tough times that are likely to be the case throughout this year.

Cut Down on Your Lavish Lifestyle

It’s a privilege to lead a lavish lifestyle. But given the unprecedented times we are living in, it only pays to cut down on such a lifestyle for the time being and save as much as possible. So, if you see e-commerce stores open, don’t order non-essentials and be left with less to carry on your daily life. Keep saving honestly to accumulate enough to live your day-to-day life without having to ask for help.

Pay Credit Card Bills Without Any Delay

If you have not opted for a 3-month moratorium, which was given as an option to borrowers by the Reserve Bank of India (RBI) amidst crisis due to the ongoing pandemic, on your credit card bill payments, you have done yourself a favour! Keep up the good work of paying credit card dues in full to avoid getting charged at a massive interest rate of 30%-40% a year. As the RBI moratorium norm says that the interest will keep accruing on the unpaid balance, there’s no point in availing it and more so if you already have mountains of credit card debts to pay. Also, put a stop to your credit card purchases till the time the normalcy is back. This will help keep the debt under control.

Rethink on Your Entertainment Plans

In the digital age, everything is available online, be it the blockbuster movie or the most popular television series. There are numerous Over-the-Top (OTT) platforms that bring to you the best of entertainment from around the world. It won’t be surprising to hear that you are a subscriber to one of these. But at the same time, you may be embracing the old tradition of watching television along with your family members at home. Given the challenging times, you can look to discontinue one from TV and OTT. Select the one that saves you more.

Cut Down on Your Mobile Expenses

Mobile recharges come with several data and unlimited calling plans at different prices. All these plans are valid for a specific period. Assuming you are a single earner in the family, you could be recharging for you as well as your family members. The need of the hour is to choose the plan that helps you meet your needs at a bare minimum. You can save further by recharging only one mobile number and contact all your relatives and know their whereabouts. As all of you would be staying indoors due to lockdown, there’s no need to call each other. This makes a single recharge all the more relevant.

Go for Digital Payments Instead of Using Cash

Payments made from digital wallets ensure savings for users with cashback and discounts. If you are still making cash payments, the time has come for you to use online wallets and save on your grocery and other essential purchases.

Make the Most of the Savings on Travel and Fuel

Lockdown has eliminated the commuting you had to do from your home to office and the other way round before March 25, 2020. You must have saved a lot on travel and fuel. Make sure you accumulate as much as you can and avoid using such savings into any non-essential stuff.

Invest in Monthly Income Plans

Above you saw the savings plan that you need to adhere to for the remainder of this year, at least. But savings will need to be complemented with investments to combat the challenge due to salary cuts. So, if you have a bulk amount with you, put it to good use by investing in monthly income plans (MIPs) of banks. Bank MIPs earn you interest at the prevailing rate of the fixed deposit. You will get the interest monthly, and with that, you can take care of your finances. You can open the monthly income plan online.

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