The financial market has been in great distress for some time now. Due to the distress, it is also being predicted the recession might come soon. Recession does create a high amount of tension in people’s mind as they can lose their jobs, a business may face losses and whatnot. So, to survive in this condition it is important that people should protect their money. If attention is not given to financial goals now it could lead to havoc in the financial health of a family, so here are the few steps which you should take which will help you safeguard the money.
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Manage a budget
Times might be tough but you can survive the tough time if you manage a budget. Budgeting is a process where a person has planned all their spendings in advance. The budgeting ensures in advance whether you will be able to meet the expenses with the given. You should make it a ritual which is to be done every month or week and plan the finances accordingly. This also helps to manage the fund’s appropriately this way the funds are neither underutilised nor over utilised. Also, start doing a healthy habit of making a file which has all the important financial documents, bills and receipts; these come very handily in case any emergency comes to surprise you.
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Invest in different schemes
As a rule of thumb, one should never invest all their extra cash into one investment scheme. To avoid the uncertainty of market conditions, one must invest in different portfolios, it will also help you earn higher returns. For example, if you have invested half of your amount in stocks and mutual funds and another half in fixed deposits this way you will be ensured that half of your money is safe and you will get returns on them. Stocks are highly volatile substances in the market, if the market goes down you might face problems. However, the case is not the same with fixed deposits as they are the safest saving option.
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Don’t take loan blindly
These days debts are easily accessible and within no time. There are hundreds of banks and NBFCs who provide loans to the borrowers easily and sometimes the interest rate is so attractive that people get tempted towards the loan. This is where one needs to be very careful and think wisely. If you want to take a loan to meet the short term goals, think twice before applying for a loan, whether you need a loan or not? If it is necessary then you do thorough research about whether this is the right time. How are the market conditions? This way you can plan your finances and if there is even the slightest doubt that the market can go down, then you can plan your finances accordingly.
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Stay Insured
You must have heard in an advertisement a person saying, “Hospital mai admit hue ni ki bill ka meter chalu”. And there is quite a possibility that during the economic crisis your family might have to undergo a medical emergency. The only solution to such a problem is- insurance. Insurance is a contract which protects you from the financial losses. During the emergency, the insurance company make the payments against which an insured person has to pay the premium once they have agreed to the insurance. Insurance is very useful during such situations, it keeps you and your family safe.
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Fixed deposit is the key
A go-to investment for many people in India for ages has been fixed deposits. Fixed deposit is a financial instrument in which investors deposit money for a certain period of time and in return they earn interest, this return can also be treated as an extra source of income. Usually, the banks and NBFCs offer an interest rate which typically ranges between 4%-7.50%. Senior citizens enjoy an extra benefit in a fixed deposit scheme; they get 0.50% extra FD interest rate from the general people. Fixed deposits are the preferred options for generations because they are less risky, even in the volatile condition of the market. So, even if you invest in other schemes it is always a good idea to park some of your cash into a fixed deposit account as it will help you balance the asset allocation.
In conclusion, it is important to build wealth as it is important to earn the money. It also becomes equally important for people to save their money in case the market is in turmoil. Sometimes the market is great for investment and returns purposes but during the economic recession, it can take a toll on individuals finances. To save people from such a situation people should do financial planning, get their finances insured and take the debts carefully.
