The COVID-19 pandemic-stricken 2020 has helped us grow much wiser, with many money lessons from this highly eventful year. You can use the crisis lessons to fix your personal finances. Here are six money resolutions that you must take and follow to wade through New Year 2021, which is bound to feel the after-effects of the COVID-hit 2020.
#1: I will maintain a large emergency fund
When COVID-19 struck, many lost their jobs and businesses shut shop. Most of us dip into our savings and investments to run the household when our incomes fall – or worse – stop altogether.
That’s where an emergency corpus comes in. This kitty should be held in liquid instruments such as fixed deposits or liquid mutual funds – to be used only in the case of contingencies arising from job loss or pay cut. Your emergency corpus should be enough to meet your monthly food and other expenses, including children’s school fees, EMIs and so on. It should be large enough to take care of at least six months’ household expenses. However, if your source of income is irregular or you are the sole earning member in your family, it makes sense to create a larger corpus worth nine months’ expenses. As far as possible, avoid taking personal loans to meet routine expenses.