How you can avoid a Personal Financial Crisis during the Pandemic

These are probably one of the most challenging times we will witness during our lifetime. Pandemics are not a common phenomenon: this is only the 8th one in the history of mankind. We are lucky that this is the digital age because the internet is why we’ve been able to exchange and disseminate critical information and precautionary measures so quickly and so widespread. And yet, we have two completely polarizing groups: one that thinks this is the end of the world and one that is completely down-playing it. The middle ground is where you would want to be – take enough precautions and yet be calm in the face of adversity! (or calmly panic as I’d like to put it!)

We are looking at a health crisis that has spiralled into an economic crisis (Yes! You read right! It’s already happening). There are millions of people just in India who depend on their monthly or daily incomes for survival. Everybody is concerned about their incomes, healthcare expenses, loan repayments, and livelihood in the months to come.

There are also millions of businesses that cannot operate from home. The aviation industry, travel & tourism, manufacturing setups, sports & entertainment industry, salons, etc. are already on their knees.

If you are a business owner, irrespective of the nature of your business, it will be affected right now. However, you can avoid getting “personally” affected and take care of your family as well.

Here are some facts:

1. The number of coronavirus infected patients reached 1 lakh on 2nd March, 3 months after it began. And then the number more than doubled in 15 days.
2. The Indian stock markets have hit a 3-year low.
3. Only 35-40% of Indians have health insurance.
4. 20% of the infected will require hospital care, which is beyond any country’s healthcare capacity to support these numbers.

So, without further ado, here are 3 things you should be doing to manage your finances:

1. Put aside liquidity for the next 6-12 months

It may sound like too much to ask for. But this is how you take care of the uncertainty that is unfolding right in front of us. First things first, nobody really knows how long the pandemic is going to last. Scientists have said that a vaccine could take anywhere between a year and 18 months. So the timeline of finding a vaccine, putting it into mass production and making it available everywhere in the world could take a reasonable period of time.

Normalcy won’t be restored the moment a vaccine is discovered, it’ll be restored when we have ceased the spread of the virus completely!

Currently, you would either be working from home or be on your way to doing so. However, numerous businesses have had to temporarily shut down operations. More than the owners, the employees have to face the consequences of this. In a lot of cases, employees are being given unpaid leaves. If that is you, you should think about keeping cash for your monthly survival.

Here’s you calculate this: Only calculate the amount for necessities to live – Food, utilities and shelter for a month. Example:

Rent/EMI 15,000
Groceries 5,000
Telephone 500
Internet 1,000
Electricity 1,500
 Total 23,000
For 6 months ₹1,38,000

Put aside funds for this sum as it will take care of you for the foreseeable future. It’s a healthy practice to have an emergency fund and this point in time does qualify as one.

P.S – If you are cash strapped, you might want to refrain from adding Netflix & other subscriptions in this list.

2. Stray away from the stock market if you are a layman

The stock market is in a freefall, is it the time to pick up the pieces of the ‘big’ companies. They surely would come back to the top right? Maybe. But how long will that take? Nobody can say for sure.

The indices are already tumbling, merely on the news of these things happening. Once the year-end numbers start coming up, realistically speaking, it’s going to slide down further. Now you are likely to hear people saying you should be investing in stocks right now and that this is a golden opportunity. However, if you don’t exercise prudence and make responsible decisions, you might just end up trying to catch a falling knife!

The economy is taking a serious hit. India was already in an economic slowdown, and the pandemic is only making the situation worse. It would be prudent to avoid making any financial decisions without the calculated advice of your financial advisor. However, if you need funds to make up for your emergency fund, you may need to withdraw funds from the stock market.

Strongly advise to not pay heed to generic advice that keeps popping up on banking and news apps and to speak to your financial advisor (or find one!).

3. Mediclaim your way to protect yourself and your family from Coronavirus

You’d think that the leading reason for people going bankrupt would be bad financial decisions which then culminates into default in loan repayments or the selling of crucial assets to do so. The leading reason happens to be medical expenses after lengthy hospitalisations.

The expenses of dealing with hospitalization are so high that it renders people bankrupt! The way out of this scenario is to get Mediclaim. Many employees get covered by the companies they work for – this is typical of corporates.

If you work in an unorganised sector in India, it is very likely that your employer has not covered you. You need to look out for yourself and your family’s medical expenses if the need arises. In such a scenario, if you have availed of Mediclaim independently, you are likely to get a lot of relief from out-of-pocket medical expenses.

And that’s it, folks! These are three tips for managing your personal finances in our current times of crisis. Stay safe, wash your hands and #socialdistancing. Reach out to us if you need any advisory.


  1. Very well written and to the point. Personal finance should be a top priority for each one.

  2. Very nice…

    Most important and practical awareness… Everyone must follow it…

  3. We have already invested a sizeable amount in mutual funds. Shall we continue our sips?
    Shall we invest lumpsum amount in some of the performing mfs At this stage?

    • You should continue with SIPs or even invest a lumpsum amount in an MF only and only if you can mentally write off these amounts for the next 2-3 years because it is very likely that you may not be able to withdraw these sums at a profit or the principal value.

      Even if this scenario does not happen, you should be prepared for it.

      This is, of course, assuming that you have an emergency fund to take care of any major expenses that could arise.

      My apologies for the delay in reply!

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