With shopping malls, restaurants, cinemas, and airlines shut for business due to the coronavirus outbreak, people are discovering an unlikely benefit of the lockdown. They are actually saving money. Yes, lockdown helps in saving a lot of money hence can improve your financial wealth. The money being spent on these leisures can now effectively be saved. Hence, you can further invest this money in a lot of savings instruments to make your financial future strong. future. So, let’s see how this lockdown will be beneficial in terms of saving money.
Cut Down Your Extra Expenses: You can start by writing down your expenses to see how you are spending your money and where you can cut back. If you don’t know where your money goes each month or even how you spend, you won’t be able to know what habits you can change. Now is the time to develop a saving plan for the future.
Don’t Panic Buy: Panic-buying erupted when people heard the word lockdown. Unless you are preparing for a zombie apocalypse don’t do this, as you spend more and are often left with items you don’t need. Identify what essentials are needed and purchase what you need. In a lockdown, we are still able to visit food retailers to purchase what we need.
Manage Your Debt Orders: Pull up your monthly debit orders to see what services and subscriptions you are paying for monthly. You might find out that you are paying for more than you realised. During this period, you might also want to cancel a few unnecessary subscriptions that you won’t use during this time. It’s best to speak to the service provider to determine the terms and conditions. You may be able to re-subscribe at a later stage.
Redeem Your Cashback and Rewards : If you are a credit card holder, you get a lot of rewards and cashback while you shop from your card. Thus, these collected rewards and cashbacks can easily be redeemed online. You can shop using these points and can save your money. Open your credit card account and check how many points you have collected and for what items, you can redeem them.
Where You Can Invest Your Saved Money
Build an Emergency Corpus: This is the first and foremost thing you should be doing with the saved money, particularly in an uncertain economic situation such as the present one.
Some banks allow parking money in FDs and automatically ‘sweep it in’ to savings accounts when there are debits from the latter. This allows you to earn a higher return than savings account interest. Never expect any great returns on your emergency fund. You should be able to access the funds immediately. Learning from the ongoing crisis, one should try and have 12 months’ living expenses in the emergency fund. This will give you a peace of mind and confidence to face any untoward situation.
Invest in Mutual Funds: You can also consider investing some money in mutual funds. For low-risk investors and those with a time horizon of less than three years, debt funds work best. However, if you have a sufficiently high-risk appetite and a time horizon of 7-10 years, you can look at equity mutual funds. However, experts suggest splitting this into staggered amounts through SIPs rather than lump sums.
Contribute in Health and Life Insurance Policy: It would be advisable to buy a health and life insurance policy. This is the right time that you should have one. Make sure that you have a robust health/life insurance policy in place that covers coronavirus treatment. A small monthly contribution will be a life-saver for you in the future.
Look Out For High Return Saving Avenues: There are a lot of saving instruments available in the market such as RD, PPF, NPS, Post Office Savings Scheme, Senior Citizen Savings Scheme, etc. Investing a small sum in any of these avenues can help you get higher returns hence you will have a big corpus ready for future purpose.