Impact of Pandemic on Our Savings Culture

Before you put your money into any investment channel, financial literacy will help you make the best choices

Impact of Pandemic on Our Savings Culture
Krishna Prasad 12 May 2021

Today, the whole world is in a topsy-turvy state, screaming, crying, weeping, and drowning in tears for help due to the chaos created by the second wave of the Covid-19 pandemic. A long wait for vaccines has vexed people’s sight and shattered the hopes of the country before even things got started. Even doctors regret the current situation of not being able to get patients admitted to the hospital due to oxygen shortage and crunch in medical supplies.

The situation in India seems to be out of control and the inevitable election rallies continue to galore in the nation as if nothing has happened. At this point, as the unemployment spike continues in India in 2021, a lot of people are not only grappling with their lives but are also anxious about their trimming monetary savings. In this crucial hour, savings is the only thing that could help people swim to the shore safely.

The ones who have a good habit of saving money regularly are at the safer side of the bridge, while the others with meager savings are struggling to meet their basic needs, especially the lower-section and migration workers, and people in rural parts of society. However, on the contrary, people have saved far better than the days before the pandemic took the world by a storm.

According to CIME reports 2021, Indians have reduced their spendings during the pandemic and saved $200 billion extranet savings. In a way, this deadly virus, that I call the ‘scary-invisible ghost’, has taught people a clump of financial lessons on the go, especially during the pandemic. Not just that, today, we also witness plenty of women coming out of their comfort zones and subscribing to financial/investing lessons online.

Compared to 2020, this year, women are taking sheer control of their earnings and are investing virtuously, better than men. Speaking to Beaulah, a 24-year old M.Com graduate from Chennai, she said she’s always interested in money matters from the seventh grade, which is quite rare for women to have or show such an interest in money matters. However, that has changed today. Most of the women are holding top positions in companies, parliament, and wherever possible to lead from the front.

“Before pandemic, I invested in fixed deposits, recurring deposits, gold, G-Pay gold lockers. Now, I’m investing in mutual funds, stocks, and bitcoin. Even if the risk is high, I want more reward. I can wait for a long period, as I’m still young. So with that thought, I invest aggressively. At the start, I used to invest Rs 1000-1500 per month, but now I’m investing Rs 15000-20000 per month” says Beaulah.

During the pandemic, Beaulah has also made good returns on her investments. And she always keeps a tab on her money as soon as she invests. “So far I have invested in 7-8 mutual funds, both small caps, and mid-cap. I invested more in low-duration funds to earn quick returns in less time. Overall, I used to get up to 30 per cent returns”, asserts the Chennai girl.

Just like Beluah, other women can take their first leap of interest in learning about money and investing matters. If you ask why? It’s simple - Financial literacy will aid you in taking the right decisions before you put your money in any investment avenue. Plus, as you grow older, your money should grow with you to take care of your personal needs, health, retirement planning, etc.

Dipika Jaikishan, COO & Co-founder, Basis, said, “In case something unforeseen happens to the male in a house, a woman is left in a very vulnerable situation, especially if the family does not talk about money. Women need to be aware of who are the nominees on various investments, what financial assets the family has, how can they be accessed? How does one claim on a health insurance policy and so much more? At Basis, in these sensitive times, we are having a whole bunch of conversations within our community about the same.”

Basis is a first-of-its-kind platform that aids women to achieve financial independence through expert advice, in-app learnings, and supportive communities that discuss and share common interests concerning money. Well, considering the humanitarian crisis out in the world, the way people save money has changed. In such situations, it’s very important to have a cover for the family or as an individual to finance during emergency needs.

On that note Basis Co-Founder Dipika said, “If there is one realisation in the pandemic, it's that most of us are underinsured on our health and there is a need for each person/ family to keep liquid assets. Typically, one is recommended to keep at least three months' worth of their expenses in places where the money can be encashed quickly, however, this need seems to be at least 9 months' worth of expenses. A Covid hospitalisation is expensive, as is home isolation. One hospitalisation can dent a family's finances significantly. An adult individual above the age of 18 should have at least a comprehensive ~ Rs 10 lakh cover”.

In this grim hour, especially where the unemployment rate is touching the skies, both men and women who are employed should keep a regular tab on every penny they spend and earn. “You are the owner of your financial destiny and you need to start taking charge now. Start by putting aside at least one-tenth of your monthly income. If your monthly income is Rs 30,000, start with at least Rs 3,000 per month. Start working with small amounts of investments in a disciplined and consistent manner, where you’ll go a long way in building wealth over time”, advises Deepika.

She concluded by advising, “There is not the right time to invest, the right time to invest is now. Considering the current situation, keeping your money in liquid investments, such as a fixed deposit or overnight mutual funds is a good idea.”

The author is a freelance journalist and writer

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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