We are sure; everyone has their own story to share when demonetisation hit India on 9th November 2016. Mr Kamat had a terrible experience during this period, as his daughter’s wedding was approaching.
Mr Kamat had done some of the early preparations for his daughter’s wedding to be taken place on 21st Nov 2016. But the major money matters including catering, venue, and clothes. were yet to be handled. When demonetisation news hit in the evening of 9th November, the whole world collapsed for Mr Kamat. As the wedding was just a few days ahead, he had a lot of cash in his house to pay for different needs. His wedding woes were increased due to regular visits to banks. From that day he learnt that financial planning is a must. Anything can happen in the blink of an eye, hence knowing all the digital modes of payment are vital in this era. From that moment, Mr Kamat took necessary financial decisions to make his life simpler.
We too must be prepared, in case anything like demonetisation hits again. Here are some smart financial steps:
Emergency Planning…A Smart Move!
Your first step towards taking a smart financial decision should be planning for an emergency. People often focus on financial planning with long-term gains in mind and forget about the liquidity of assets. Remember the time when the ATMs were shut, and you had to wander every day for cash for your daily needs or to pay for medical treatment? Yes, a high-value property won’t help in such times. Hence, you should have a contingency plan that comes with liquidity.
Have investments that can be liquidated in just a day’s notice. Have an emergency fund that should be equivalent to two to three months of your living expenses. These funds should be worth more if you have a family to take care of. Make sure that your funds can be accessed during emergencies easily and should provide you with better returns.
Tax evasion…A Big No!
Know that when you evade your tax, you are committing a crime, so ever evade your taxes. There are many vehicles through which you can save your taxes under section 80C deductions. Know your risk profile and accordingly select a tax-saving instrument.
Say Yes to Portfolio Diversification!
Know this thumb rule” Always diversify your investments”. Make sure that your portfolio is a mix of physical as well as financial assets. If you are investing heavily in real estate, think again, in case of an emergency situation, you will not be able to sell it in a short span. This could turn out to be a disaster situation!
At the same time, instead of stuffing up cash, invest it in better financial instruments. Keep minimum cash on hand as per your requirements. Invest your money in instruments that offer higher liquidity
It is time to have Insurance Policies!
In the very first week following the demonetisation, we witnessed the cash crunch that tore apart the healthcare system as most people could not pay for healthcare treatments.
This is a warning sign telling us the importance of having an insurance policy, not just a medical insurance but also having bike insurance online policies. If you want to secure yourself against demonetisation, go with online mode of purchasing insurance policies which eliminate the need of making payment via cash. For instance, if you want to have a two-wheeler insurance, there are various bike insurance companies in India which offer insurance policies online. Thus, you can purchase an apt two-wheeler insurance online as per your needs.
We would advise you to go with a long-term bike insurance so that any mid-changes don’t affect you. In case of a long-term bike insurance policy, you will only need to pay the premium once in every three years, and it means, you can save yourself from any new guidelines issued by the government in the middle of the year.
Embrace the Digital Mode!
Going digital is equivalent to simplifying life! Digital payment today is not just ordering a ride, or ordering a burger from a food chain. After the cash crunch, it is essential that you inculcate the habit of paying online for your regular needs.
No wonder people are rushing towards net banking and digital wallets and learning about online fund transfer. Understand that, the digital wallet is here to bring more transparency and fast-paced transactions.
Keep Track of Your Financial Documents!
We have all gone through the last-minute rush to locate the financial documents in the hour of need. Hence, it is essential that we learn from our mistakes and gather and safely keep all important documents in one place. Also, make sure that you have two attested photocopies of each document as well.
You can also make use of digital lockers to store essential documents. Even when you apply for a bike insurance online you need to submit ID proofs, so keep them safe.
The Final Word:
The demonetisation that took place in 2016 should be a necessary lesson for everyone to make better financial decisions. It is essential that we chalk out our monthly budget, prioritise the expenses and spend frugally.
So, embrace the new age of financial management and secure yourself for life!