While staying physically safe and preventing COVID-19 from spreading are top priorities for everyone. Managing personal finances is also paramount, particularly for self-employed people. With the national shutdown due to the coronavirus pandemic, self-employed are more affected than their salaried counterparts. Considering the irregular cash flows and lack of employer-provided health benefits, the impact of COVID-19 on self-employed are more. They are primarily alone in maintaining their financial shortfalls and health security.
Listed below are few transactions of money to minimize the impact of COVID-19 on self-employed people and to ensure financial stability amid the pandemic:
Enhance Emergency Fund
Salaried individuals should maintain an emergency fund equaling at least 6 months of their mandatory monthly expenses. The impact of COVID-19 on self-employed is more, and hence keeping emergency funds is necessary. Self-employed persons lacking income assurance will sustain this fund on the higher side, covering at least a few months of expenditures. However, considering the effect of the COVID-19 pandemic on the global economy, the current uncertainty could have long-term implications. In such a case, it is vital to update your emergency fund to suit your responsibilities and requirements. The contingency fund will come to rescue if you face any revenue losses due to pandemic shortly. You should park funds in ultra-short-term funds and high-yield saving accounts as emergencies come unannounced.
Go Digital to Repay EMIs
You can still keep on top of your finances by remotely monitoring your EMIs, SIPs, and insurance premiums. Use digital payment forms such as UPI, online banking, e-wallets, etc., instead of using cheques or cash for payments. Routing your payment via digital mode will increase social distance in a situation. It will also save you from overdue payments or defaults.
Review your Health Insurance
Health insurance is one of the best financial instruments to procure because it covers not only the potential medical conditions. The health insurance can also cover COVID-19, which will be a relief for self-employed. The health insurance benefits can include pre- or post-hospitalization expenses, ambulance costs, hospitalization tests, etc., depending on your insurer. Ensure that you purchase health policies with sufficient cover to shield yourself and your family from high hospitalization costs. However, remember health insurance taken newly will be subject to a waiting period of thirty days. The hospitalization-related costs will only be covered after the completion of thirty days from the date of issue of policy. The impact of COVID-19 on self-employed can be taken care of by taking health insurance.
Avoid Discontinuing Investments
As a knee-jerk reaction to sharp market declines, many investors appear to redeem their existing mutual fund investments. The impact of COVID-19 on self-employed people is resulting in discontinuation of their investments. Self-employed investors should use this to enforce their asset allocation strategy and restore their original asset mix. Always make your investments because it is difficult to predict the bottom and length of any period.