Here's how you can manage your money during uncertain times

You may notice one commonality when interacting with the most experienced and successful people. Almost all of them will vouch for the fact that the tough and uncertain times they faced eventually turned out to be their silver linings making them more resilient in life, including their finances. While one can never predict when something unforeseen will dawn upon them, the following steps can help one manage their money during such ambiguous times. 

1. Savings and emergency funds: It is vital to maintain cash flow liquidity through your emergency funds savings. Experts suggest one must maintain liquid funds with at least 6-9 months of their lifestyle cash flow in safer and easy-to-access places such as fixed deposits (RBI-regulated banks) or short-term debt mutual funds or savings bank accounts. The larger your emergency fund, the better your ability to sail through shocks. On the other hand, one must avoid keeping funds in the cooperative, company or private deposits. While such a company deposit can entice you with higher interest rates, it can result in the capital getting stuck in a tough environment. 

2. Investments and insurance planning: You must always invest according to your financial goals. This process helps you avoid redeeming investments unreasonably, especially those in fundamentally strong equity assets such as mutual funds or equities. 

Varun Girilal, Managing Partner, Scripbox, said, "If your savings allow and you have enough emergency funds, it is good to work on a new financial goal and make monthly mutual funds systematic investment plan (SIP) investments. Avoid risky and speculative ‘get rich quick’ investments such as Bitcoins or locked-in investments such as investment-based insurance schemes."  

Apart from this, one must always have a family floater health insurance for self and individual health plans for their parents. 

Girilal said, "Keep your medical and term life insurance (Not Traditional moneyback, endowment or unit-linked insurance plans) intact for security and safe spending. Don’t be dependent only on your corporate or group mediclaim." 

3. Relook at your current and anticipated expenses: You must continually streamline your finances by filtering out expenses under categories like ‘necessity’ and ‘discretionary’. It will help you bring efficiency into spending. For instance, large asset purchases such as cars, homes, expensive holidays/events, home furnishing/improvements, etc., come under discretionary expenses. You must try to reduce or postpone such expenses until you have a surplus amount left in your bank account to make such purchases. Besides, today is the era of subscriptions, so it’s good to regularly check all kinds of subscriptions you have enrolled for – digital apps, websites, etc., and otherwise and stop inessential ones. 

Girilal said, “If the rising loan equated monthly instalments (EMIs) due to increased interest rates is stressing your finances, negotiate with the lender to increase the EMI period and keep EMI same or lower while ensuring that you get your finances back on track through either part pre-payment or increasing the EMIs once your financial condition improves.”