Financial Literacy: Remedy for Your Financial Health Crisis Amidst the Pandemic

A lack of preparation is the primary cause for the chaos amid the second wave. During the initial months of 2021, the focus was on vaccine development as well as distribution. The lockdown restrictions were relaxed as the number of infection cases had dropped. It seemed like the pandemic was contained at the time. In the similar vein, do not let the lack of financial knowledge impede your financial health in these critical times.

Sadly, while India battles the second wave of coronavirus infections, there are concerns about the possibility of a third wave hitting the country later this year. However, its impact can be minimised with the right preparation and adequate precautionary measures. Experts say the steps we take now will determine the extent to which India may be affected by the third wave.

Consequently, there have been effects of the COVID-19 pandemic crisis on other aspects of life, mainly the financial health of individuals. The lockdown restrictions created a domino effect as some businesses were classified as non-essential and their cash flows stopped, which led to loss of work and income of many. It is essential to be financially equipped in order to be in pink of your financial health in such challenging times.

​A day ago, I called my aunt Meena to say I had booked her a slot for vaccination. While we were discussing the current COVID-19 scenario, she said, "Mitali do you remember how I was struggling with the finances exactly a year ago? Thank god, you helped me out."

When the first wave of COVID-19 hit last year in 2020, no one had any idea about the unprecedented events to follow and its massive impact on our lives. Meena struggled with financial hardships during the initial phase of lockdown; she is a single parent and works in hotel management. Due to lockdown restrictions, the hotel incurred losses and she was affected with a 50% pay cut.

In 2020, concerned about how she would manage the household and financial requirements, Meena called me, "My dear, I am having financial difficulties; my salary for the next few months has been reduced by 50%, and I am not sure how I will manage the family's expenses."

I consoled her, "Don't worry, we will figure something out. To begin, tell me about your savings, investments, and monthly costs so that I can gain a better understanding of your financial situation."

She said, "I do not understand the multiple complex financial products so I have not yet made any investments expect for fixed deposits and I have a certain amount of savings. Apart from this there is a housing loan EMI which I need to pay and educational requirements of my kids."

​I explained, "We need to start with budgeting first to have a systematic approach towards your cash flows. To balance out the pay cut, you need to write down your expenses and cut off the non-essential ones. Calculate your total savings amount to figure out how many months it will last you and keep a track of your expense including loan EMIs."

"You must give priority to unavoidable expenses and prevent any excessive spending to have a surplus amount. This will help you for the short term, but if you want to have a better financial future in long term, you must have a financial plan that aligns to your future goals and helps your weather any such storm."

To which Meena responded, "Listening to you gives me a sense of relief, this helped me have a better grasp on how to manage my finances in these crisis. What exactly do you mean by financial planning, could you elaborate this for me?"

"The objective of financial planning is to have a sound financial health in future, it will help you build an emergency fund so that you don't struggle in challenging times and have a safety net to fall back on. It will lead you to perform budgeting and goal setting exercise, reducing your debt burden if any, selecting your investment avenues and securing your family with insurance plans", I elucidated.

Meena replied, "Sounds great! But, I don't think I will be able to construct a financial plan for myself. I am not familiar with finer points of financial planning and money management skills."

To which I responded, "Gaining financial literacy could enable you to understand financial planning and help you make sound informed financial decisions. You need to empower yourself with the weapon of financial knowledge."

"I do realise that I lack financial awareness which is vital in the current environment for every individual, but how do I enhance my financial knowledge now?" Meena asked.

I replied, "Not everyone is financially savvy, but you could take meticulous efforts and enhance your financial knowledge. When a woman is empowered with financial knowledge, she will ultimately guide her family and encourage her children to develop financial literacy at an early age. Meena aunty, you could become your own financial planner and financial guardian of your family."

"I suggest taking advantage of PersonalFN's special initiative called "Certified Family Guardian" course, you get an exclusive opportunity to learn the finer nuances of financial planning and money management from the comfort of your home. It is will enhance your financial knowledge and help you make informed financial decisions for your family's better financial health."

She exclaimed, "Amazing! I like the idea of this course and I could easily enhance my financial literacy at my convenience from home."

Meena enrolled for the course that assisted her in efficiently managing her finances and she continues to maintain her financial health appropriately.

You see, financial literacy is one of the important element in today's world for an individual. Many have suffered financial difficulties amid the pandemic due to lack of financial literacy; and without a proper foundation in personal financial management, it is easy to fall into financial distress.

Financial literacy is the confluence of investment, credit, and debt management knowledge that is necessary to make financially responsible decisions, choices that are integral to our everyday lives. Financial literacy assists you to grasp strong financial principles that help you manage financial risk effectively and avoid any financial pitfalls.

The financial health refers to the financial situation of an individual whether secure or unstable, just like your physical health, maintaining your financial health is also an imperative task. Financial literacy leads to maintaining sound financial health, especially during periods like economic turmoil and uncertainty like the one we are facing now as a result of the pandemic.

This pandemic has not only affected the world economy, but also the family's economy. Financial literacy will help individuals avoid financial concerns and facilitate individuals to manage their income well even in demanding situations.

In a nutshell, the aim to conduct faster vaccination drives is a strategy to prevent the spread of virus, to mitigate the possibility of third wave of COVID-19 and to alleviate the public health crisis. Similarly, financial literacy will help you make worthy financial decisions and facilitate proper financial planning. It is the remedy to keep you in the pink of your financial health amidst the pandemic or any other adversity.

PS: PersonalFN encourages you to enhance your financial knowledge with its "Certified Family Guardian" course that will help you learn about the financial planning elements to guide you and your family through these challenging times.

​Organised into eight modules with 24 extensive videos, the "Certified Family Guardian" will help you with all the relevant tools and learning modules needed to get better at money management. It also offers a host of other benefits to help you make informed investment decisions. Read here for complete details.

So, if you wish to improve your financial knowledge and to maintain your financial health in the long run, enrol to "Certified Family Guardian" course today!

Warm Regards,
Mitali Dhoke
Jr. Research Analyst

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