How the pandemic changed personal finance and how you can save, invest and spend better

How do you make your hard-earned money grow?

This question has been written, spoken and debated at length and in depth. And, continue to.

Yet most people still find it difficult to manage, save, and invest their earnings. On the contrary, the pandemic has once again highlighted the reasons for planning your financial future from the start. And, the experience was no different for Monika halan, bestselling author and consultant editor and member of the management team of the Indian daily Mint. She says that, like many, the pandemic has forced her to reconsider the allocation of her portfolio. This is despite the fact that they are in their 50s and confident that they will win even after retirement. She reveals that it wasn’t the 30 percent market crack that sparked the overhaul, but the fact that there are fewer years to come than a younger person – both in terms of health. and income.

Money management: lessons from the pandemic

Monika could dramatically increase her backup goal the day she decides to go into a lockdown mode pandemic. While she previously viewed herself as a frugal spender, the lockdown had kept her from spending anything beyond the essentials. Besides EMIs, rent, aide salaries, and basic expenses, spending had collapsed. This experience of living with so little has been a powerful experience, she shares.

In the updated version of his best-selling book Let’s talk money – first published in 2018 by HarperCollins – Monika shares some interesting information about what the pandemic has taught us all about our money. Highlighting another financial lesson was the need to have an emergency fund. In a high-risk contract job in the private sector, she had maintained a six-month emergency fund knowing their jobs were fairly secure. But, she decided to increase the fund to two years of spending in a fixed deposit (FD). In the book she says, “The need for zero risk money necessary for survival in a safe bank (PSU or one of the largest private sector banks) suddenly becomes manifest. My emergency fund recommendation has now changed. For those forty and under in secure employment, you’re fine with six months of living expenses in an FD. But as age increases, as the risk of the job increases, increase the fund to two years for older cohorts in jobs that are not so secure. “

The third lesson was to rethink risk. From the freezing of deposits by a private bank to the closing of finance companies to the collapse of the market, nothing seemed certain, which made it clear that no financial product was risk-free, just different types of risks. She writesThe point is, there is no safe haven for your money. Every investment comes with risk and you need to decide which one you are able to take. And, here she makes an interesting observation. She points out that risk capacity and risk appetite are two completely different things. While risk appetite refers to willingness to take risks, risk capacity depends on factors such as age, number of dependents and stage of dependents, confidence in generation of income for a long time. This is why risk appetite and risk capacity must be aligned when planning finances and asset allocation. In the book, she also explains why a bond to fixed income ratio should be 30% or less. In other words, all IMEs put together should not be more than 30% or less.

She writes, “Uncertainty has been given a new name with COVID-19 for our health, our lives, our income and our wealth. While the basics remain the same, there are lessons to be learned from this crisis for our health and wealth. “

Finance is for everyone

Besides how the pandemic has brought a shift in perspective on some aspects of money and investment management – which Monika explains in detail and cites her own investments as examples – the book is of relevance. increased for people looking for practical, easy-to-read advice. -understand explanations of how to manage their money. And, here, Monika’s past experience as a certified financial planner and manager having worked in top Indian media organizations writing and directing hit columns and TV shows on personal finance advice, is highlighting. For her, the advice is not only insightful and comprehensive, but also practical. The many real-life anecdotes play an equal role in making it easy to understand. The book cuts through knives because the explanations answer all the questions you had in mind and clearly outline the steps you could take to better manage your finances amid Indian realities.

For example, the book reiterated the need to observe your spending habits and how you can analyze the trend to save money that you can invest later. She explains how once you question your spending, you’ll realize how much money you really need to manage your regular spending. and by guaranteeing the money to invest you will be able to measure your savings capacity. She advises being able to move at least 10 percent of your paycheck on hand for investments, regardless of your financial commitments – whether it’s EMI, rent, etc. She writes : “Eating out, going to the movies, traveling and buying gadgets are the brakes on big budgets. Choose a balanced diet rather than a demanding diet. Hard diets fail.

The book also demystifies many aspects of money and investment management. For example, it explains not only what medical insurance coverage is, but also whether one should invest

in medical coverage even if they are covered by their employers and what would be the amount of coverage. It explains the different policies available in the market, the prices, the advantages and the questions one should ask before making a decision. Another financial product that the book explains beautifully is life insurance and its support. She writes, “We buy life insurance for all the wrong reasons – fear, greed, pity, frustration, taxes. The real reason for life coverage, to protect your family in the event of death, is never explained. She adds, “The day you realize that it is in your best interests to separate investments and insurance products, that is the day you move solidly towards building your financial security.” Otherwise, you are creating wealth for the seller and the insurance companies.

Don’t miss the chapters on “Defining Investment Jargon” – the nature of different types of investments and their purpose. and what kills a piggy bank that speaks of the sole factor responsible for investment decisions.

TITLE: Let’s talk money

AUTHOR: Monika halan

EDITOR: HarperCollins India

BUY NOW (English): https://harpercollins.co.in/product/lets-talk-money/

BUY NOW (Hindi): https://harpercollins.co.in/product/baat-paise-ki/