Five Techniques to Help you Tackle Financial Uncertainty

8-June-2021 |

In times of economic volatility or a global financial crisis such as the one induced by the COVID-19 pandemic, it is natural for you to be worried about your finances and monetary security. The COVID-19 pandemic has hit your finances hard. Several people have lost their jobs, received a salary cut and lost their portfolio values. Households are struggling to meet their everyday expenses and the heightened medical costs. The lack of preparedness has forced many to reassess their financial situations, adopt secondary sources of income, and even take extreme decisions to navigate through a financially perturbing situation.

However, it is possible to find a financial solution to tackle this uncertainty in your life. You can relook at your finances and opt for sound investment options like a guaranteed# return plan to prepare for the unknown future.

 

Techniques to work through financial uncertainties

 

 

  1. Live frugally: One thing the COVID-19 pandemic has made clear is that you do not need much to live a happy life. However, you must have enough if ever you are faced with a financially demanding situation. If you learn to live consciously and not miserly or superficially, you can easily save more and prepare well for a financially tiring situation in the future.


    The objective is not to devoid you of the basic things or even some luxuries in life. Instead, the idea is to live within your means and not spend your hard-earned money irresponsibly. Every time you spend thriftily, ask yourself if you need it. The actions might seem small, but they can help you save a lot for your future. Instead of splurging your money, you can keep it to fulfil your financial goals or meet an emergency future need.

  2. Create a budget: The first step to live within your means is to create a budget. You can list down your discretionary and non-discretionary expenses such as grocery, electricity, water, etc., and accordingly, assign a defined sum to each item on your budget. It is wiser to keep discretionary expenses, such as online subscriptions, eating out, shopping, etc., to a minimum. The goal is to create a zero-based budget, where each rupee that you spend has a defined purpose. 

     

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    Once you create a budget and meet your budgeted limits, you will be able to save more. You can save your money in easily accessible bank accounts or cash. However, this will not allow your funds to grow over time, which is not a wise move. Instead, you can consider investing in a smart plan like a guaranteed# return plan that will provide you with a guaranteed# return on your savings along with a protective insurance cover. 

  3. Create an emergency corpus: Apart from saving to invest, it is also important to set aside a corpus for a future financial emergency. As per experts, it is prudent to keep at least three to six months of your living expenses as reserves to meet any unforeseen event in the future. Your living expenses are a sum of your rent, household costs, medical bills, loan EMIs, mortgage, tuition fee of children, etc. You should also factor in the cost of inflation when reserving for the future. 


    Your emergency corpus should be ideally more than the precise sum of your three-month living expenses. This emergency corpus should be reserved in a medium that is easily accessible to you during tough times. Moreover, you should have strict rules for its accessibility in terms of circumstances that will qualify for a financial emergency. For instance, a period of job loss or a sudden medical expense, etc., is an emergency. But the need to buy a new car is not a critical situation.



  4. Invest wisely: The most important measure you can take to prepare for financial uncertainty is to invest wisely. As an investor, you might be tempted to put more money in high rewarding stocks or similar investments. However, you cannot ever time the market. For instance, the COVID-19 pandemic plummeted the market and led to a drop in the value of shares, resulting in a significant loss for many equity-focused investors. Hence, the motto should be to create a portfolio that is optimally diversified and can sustain during market volatile times.

    You should invest in equity but also place a considerable sum necessary in investment options such as insurance. Moreover, you should also stress getting definite returns by investing in policies such as the guaranteed# return plans from Tata AIA Life insurance.

     


    With guaranteed# return plans, you get the double benefit of a guaranteed# insurance cover and assured returns. The insurance policy can protect your family in case of your absence. The guaranteed returns can provide you with financial security during   challenging times, such as a job loss or salary cut. The guaranteed# return insurance plans ensure that you meet your financial goals and turn your dreams into reality. You can opt to get payouts from your guaranteed# return plan as a lump sum, regular  income or whole income benefit, as per your preference.



  5. Have an alternate income source: Financially turbulent times come uninvited. You might think you are prepared for an unforeseen situation, whereas you could be shocked to see how a particular circumstance can take a toll on your monetary stability. Hence, it is important to have a different plan to tackle uncertain circumstances. It is wise to have an emergency reserve and also invest prudently.

    However, some situations can be more demanding than these out together. Hence, it is advisable to have an alternate or a supplementary source of income to help you tackle financial uncertainty. You can opt to work as a freelancer or have a small business of your own to support your job income.

    Moreover, you could invest in smart options like annuities or guaranteed# return insurance plans that offer assured returns. Guaranteed# return plans in India give you an option to get a payout from your policy in the form of regular income along with taxation benefits*.

     

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Conclusion

In a financial crisis, things can get stressful and overwhelming. You might need to explore all options and consider utilising resources and making sacrifices you never considered before. However, if you put in place a strategically sound financial solution, you can easily navigate through the hardest of uncertain times.

 

L&C/Advt/2021/Jun/0783

 

Disclaimer:

  • * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you

  • #Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.