Many articles were seen in
various media on how to invest during Corona time. Though there were a few good
points, many of them were trying to encourage Systematic Investment Plans(SIPs)
and other investment ideologies and showing a rosy picture while the actual
world may be different. This blog is
about a few practical ideas on how to increase your revenue and reduce expenses
during this difficult time period.
One basic thing that everyone
should do currently will be to activate their internet banking/mobile banking.
Most of you will have some amount as a buffer fund in your savings account
which is kept for facing some unplanned expenses. Keep very minimum balance in
your savings account and convert all the amount to Fixed deposit. While a savings
deposit can give you 3.5-4.0% interest, Fixed deposit can offer you 7-8%
interest. Also you can close FD after 7 days if it is necessary. Keeping an FD
of Rs.1 Lakh will give you around Rs.4000 extra which is ~Rs.350 per month. While there are many other risky investments like shares and mutual funds are there which may give better returns, it can backfire as well. So, it is better to be concervative in difficult time period. (This is not applicable for people who have millions in hand to spend and want to try their luck in shares and mutual fund.) During this difficult
period any additional revenue over and above the salary can be considered as
bonus. Remember, Rs.350 can give you 10 kg of rice with which a family can
survive for one week.
Another most important thing one
must perform is utilize the government subsidies. Perhaps a Jan Dhan account
for your grandmother might have given Rs.500 to your family. Keep an eye on
all the government schemes and make sure you are able to obtain all the
benefits that you/your family deserve. I
have collected Rs.15 KG rice last week from ration store which help us to
ensure that we have sufficient stock of rice for next 2 weeks. Similarly, it is
also necessary to make sure that you shall not be a beneficiary of any scheme that you do not deserve as there
are thousands of eligible citizens waiting for the same.
It is equally important to reduce
expenses along with increasing income for surviving difficult time. Perhaps
this is the area where we require micromanagement. We must be able to find out what percentage of
our income are used on various expenses heads like – Household expenses – Food and
groceries , Energy Expenses – Electricity Bill, Petrol etc, Communication
Expenses, Health /Medical Expenses , Expenses for Children education etc. Among
all the expenses head, Cost of Petrol is expected to decrease while electricity
bill is expected to increase. There is not much variation in expenses is
expected for medical expenses.
For those salaried persons, it is
quite sure that your expenses would have halved in past 15 days which would help
you to save better.
1 Usage
of Substitutes or Lower Branded items.
Purchase
Beetroot instead of Carrot for preparing side dish (Cost of Carrot is high in Kerala
. It may vary from state to state and country to country). Also use maximum
items available from your field. For eg. If you have jackfruit tree at home,
make sure you use all the jackfruit in the tree for consumption as every dish
made using jackfruit will help to reduce your expenses of vegetables that you
purchase from outside.
Using Santoor
Soap instead of Pears is also a way to reduce expenses.
2Use
of energy efficient mechanisms.
At home, number
of people will be high on day time due to lock down. Try to make sure that all
the family members sit in hall/one room during day time as it will help to
reduce electricity bill. Another suggested method is replacing existing fans
of 60-75 watts energy consumption with 27 watt/dc fans once the shop opens. We had done the
same on Last September and average energy consumption at home had reduced by
1.5 units per day. Average electricity bill was reduced by more than 25%.
(Around Rs.200-250 Rs. Per month)
3Cancel
all the unnecessary expenses which include purchase of branded new electronic items
like watch as well as cosmetics (if you are sure that you can survive without
that).
4
Hold
capital expenses like purchase of Car/Bike. If it is totally necessary, then
purchase a Hero Honda Splender instead of a Royal Enfield Bullet. Banks may
offer you a lower rate of interest to attract you but you need to confident
that you will be able to pay EMI for next 4-5 years if your are purchasing the
same with loan.Remember, your are purchasing a vehicle for your consumption,
not for giving it to Bank.
With proper
financial management, while the Income can be increase by 2-3% only, expenses
can be reduced by 50-60%.Use the saved amount as FD which will offer you better
returns or donate to PM/CM funds so that it will be beneficial to the nation.
Remember, you can survive only if the nation survives. You can buy rice, fruits
and vegetables only if someone cultivates it.
Another important point is,
Students who are graduating in
2020 will be most tensed as they will be having lot of difficulties regarding
placements and those who got offers may not be allowed to join as per
schedule.I had graduated in 2009 while a lot of people were saying that the
world is going to end along with the recession. I was quite happy to stick to
the only offer I had received and tried to survive and felt sad for those who
had received offer letter but it was withdrawn by the companies. For many of
them, life was miserable. But there were a few who had long term view and went
for higher studies (MBA/M Tech/PHD).By the time their education got completed in
2011, the world had changed. So, the point is, if your salary is not
necessary for your family to survive, you should try for a higher studies and
make yourself ready to compete better by 2022. This is applicable for those
whose parents/other family members are working currently and will not be
retiring from job for next 3-4 years.
