The spread of the COVID-19 pandemic has become an unprecedented situation across the globe. The outbreak was declared a public health emergency of international concern on January 30, 2020. Since then, the pandemic has grown at an exponential pace affecting more than 195 countries. This pandemic has resulted in a plentiful economic impact, financial slowdown, and business uncertainty. The financial burden shall result in a considerable amount of unemployment, layoffs, salary cuts across the developed as well as developing economies. In this context, here, we have listed five things to manage finances under lockdown.

Also, here is a quick representation of how the spread of the COVID19 pandemic has acted as the destroyer of wealth in the financial markets.

Though the things mentioned here may be quite commonly known, yet, only a few individuals tend to act upon them.

1. Evaluating near term liquidity

Most countries are grappling with lockdown for at least one month. Based on the spread and potential risk, this lockdown may last for many months. In such a situation, maintaining enough liquidity for near term survival becomes a must. According to classic personal finance tips, an emergency fund amounting to six months' expenses is a must. This fund can be held in liquid assets like cash, digital wallet, current account, savings account, or a short-term debt fund. To evaluate our near-term liquidity, we should look at monthly expenses related to grocery, medicines, rent, utility bills.

2. Leveraging credit cards in a disciplined way

In case we have a credit card, use it only for survival expenses. It will allow us for an additional period of at least 45 days to defer our payments further. We need to figure out the usage of accumulated bonus credits to get discounts. The best way is to use credit card discounts on online shopping for groceries & utility bill payments to ensure minimal pay-outs. Good credit history has multiple advantages. There are zero cost EMI option availability and convert the pay-out into smaller down-payments. Avoid credit card usage for non-essential items and consumer durables.

3. Avoiding panic buying and hoarding

During the pandemic, the most important thing is to stay safe from COVID-19. The requirement to quickly collect or hoard groceries, food items may expose us to the virus itself. The tendency to hoard in anticipation of price increases later on as well is not the right excuse for panic buying.

4. Liquidating investments for emergency requirements

Ideally, this should be the last option for managing finances under lockdown. However, there a few things that we can do without incurring a considerable loss. In case if we are maintaining recurring deposits, we can stop payments and restart after a few months. In case of fixed deposits, choosing the ones with lowest returns and most extended periods remaining to ensure minimal loss in case of a breakup. There is an option to pause equity-linked savings schemes having a lock-in of around three years. Also, recently, the rates across various debt products have been reduced, so some funds can be liquidated to meet emergency requirements, for example, provident funds, endowments insurance plans (if the premium is quite high). We may also want to look out for booking partial profits from open-ended mutual funds as well as stocks.

5. Creating an alternate source of income

Emphasized quite a few times, this is probably the essential asset to fight uncertainties. Most people depend on a single source of income, which comes from either a job or a business. It is crucial to avoid this situation by leveraging either investments, knowledge, network, skill, or aptitude to create an alternate source of income. Once the alternate source of income exceeds our primary income, we are financially free, and good time invest.

These five things not will help us manage finances under lockdown, but also create a sense of financial discipline by limit our spending. As this pandemic has taught us one thing for sure, 'health is the wealth', so stay safe and follow lockdown regulations to ensure good health.