I caught Coronavirus in the 2nd wave, you can read the story at. During this period I have learned about certain personal finance lessons which I can only learn in rural India. When I got infected I was in a small village called Ramsara which is around 3 km away from Churu city. Though Churu was a city, it was actually not so big and can easily be called a big village. Some of the personal-finance experience I have to keep in mind because of Covid are:
PC: Pixabay.com
Usage of Cash
When I was in Bangalore, I was using my phone for almost every transaction be it Rs 10 or Rs 10000 using UI based fund transfers. But what I have seen in the village that Cash is king at any given time. The big hospitals also were not willing to accept UPI payments or Cards. But again the problem with the cash is, the ATM's were not fully functional and it was hard to get the Cash.
Also for transportation, we have to give cash as in the village the UPI payments are not so popular. And also in this pandemic, everyone wants to have cash in hand because of emergency purpose. Thus the pandemic has made me learn about the importance of cash. Thus we can say that cash is still relevant even though we moved to cashless.
Importance of Emergency Fund
Though I was lucky that I was not hospitalized but still in that situation so that I can pay the full amount of hospitalization beforehand all thanks to my emergency fund. In some of my previous posts, I have stressed why it's important to have the emergency fund and thus I can say that I follow it and after the last year lockdown I have increased my emergency fund to almost twice which was earlier.
Though I had the personal insurance and my company's insurance since getting the bed was difficult, there were some hospitals that were not accepting the cashless benefits of insurance so we have to pay the bill and thus emergency fund would have been a great help. Though I do not have to utilize my emergency fund but having an emergency fund during such a crisis will give us great relief.
Parking Emergency Fund
It's good to have an emergency fund but it also better to know how to park your emergency fund wisely. I have gone through a lot of financial advice for an emergency fund and almost everyone suggested keeping your emergency fund parked in liquid funds or other debt funds. I also have kept a lot of money in my liquid funds. But the problem with these funds is that some of the funds allow you to have instant redemption up to a certain limit a day. If you need beyond that you have to wait for 1-2 days depending on the next working day. Thus now what I have done is to have a strategy like below:
a) Keep two months of expenses in my savings account, forget about the returns.
b) Park remaining 70% in bank fixed deposit (FD), and thus split each FDs equally. So for example, if I am keeping 5 Lakh into my savings account, I will split it into 5 FDs of 1 lakh each. This will help me to premature my FD in smaller chunks and thus I don't get a withdrawal penalty on the whole amount.
c) Park another 20-30 % in liquid funds which allows instant redemption without any clause.
PC: Pixabay.com
Use Credit Card
I would have used my Credit Card in case of an emergency which would have given me more than 30 days to pay them and thus you get ample time for your salary to get credited instead of using your emergency fund. Also when you have the insurance what you can do is to submit the document and thus get the money and pay the due in this way you don't have to break your FD. But yes if the bill is more, you have to use your emergency fund but this can be a way to avoid breaking FD and get a premature penalty.
Stay Safe, Stay Healthy
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Great post brother, really enjoy your posts it sure takes time to read 😄,
It's good to hear that you are safe and healthy now.
Thanks for the great advice I love to read your financial posts I learn a lot from them every time thanks.
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!giphy great
Via Tenor
Thanks for sharing! This just really pins the importance of emergency funds and how easily accessible they should be. Glad to know you have recovered from the pesky virus. Keep safe.
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