The Covid-19 pandemic has taught us some financial lessons we would have preferred not to learn. Here are seven personal finance lessons that we can learn from the ongoing crisis, which could make the next downturn little less painful.
Emergency funds are not wasted assets
Many financial advisors consider emergency funds to be wasted assets, but the Covid-19 crisis has shown the wisdom of having adequate emergency funds. If there is a pay cut, a delay in salary, or job loss, an emergency fund can help you tide through difficult times.
The rule of thumb for creating an emergency fund is to have at least 3-8 months worth of bare minimum expenses in your kitty. Going forward, building an emergency corpus should be seen as essential, even as we focus on investment and earning handsome returns post Covid-19.
Short-term investments are unreliable
Panic selling as a result of uncertainty is spooking markets around the world. Therefore currently, you might see around 25% to…