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The recently announced lockdown has resulted in a severe liquidity crunch for businesses around the nation. However, this isn’t the first time that companies have experienced an economic downturn. The ‘Great Recession’ from 2007-2009 marked a similar decline in economic activities.
In today’s digitised world, you can conduct your financial activities online and now pay your taxes using the gst online payment method. However, this sudden stop in economic activities has resulted in many industries stagnating production, and a lot of people losing their jobs.
Unpredictable times require extraordinary measures that can help you in navigating the looming recession with the least attrition to your business. Let’s have a look at six valuable lessons that we learnt from the last recession that can guide you through today’s uncertain times.
Lessons To Secure Your Finances During The Lockdown
Monitor Your Expenses And Spend Accordingly
Your job is your primary, and perhaps only, source of income and will remain so in the foreseeable future. However, these times have made your job more un-secure than ever. Even businesses are incurring losses due to a drop in demand and a decline in public footfall.
You must remain financially secure by implementing a proper spending plan that can help in maximising savings. Following a conservative spending pattern can help you avoid setbacks considerably.
Expand Your Emergency Fund Savings
Post lockdown, it is possible that businesses would be scaling down their workforce rapidly, and it would be challenging for unemployed people to find a new job. Circumstances such as these require a robust financial backup in the form of savings or emergency funds.
If you have a job or a business, this is the right time to boost your savings for the coming months. Having sufficient savings can ensure that you have a financial fallback if you lose your job or the business suffers a loss. Moreover, it gives you a relief window in your job search if you get laid off.
Try To Minimise Debt
If you have any kind of short-term debt such as credit card dues or small personal loans, try to close them on priority. An ongoing obligation compromises your ability to handle the recession as well as income drops.
You can analyse your monthly income stream and start paying off your debts as soon as you can. The lockdown has barred people from spending cash on luxury items or major purchases. If you have a regular income as of now and have spare funds, try to close off all your short-term debt accounts.
Follow Up On Your Taxes
Since everybody is forced to be at home, it has become quite natural to forget routine tasks such as keeping track of your taxes. The gst tracking portal allows you to easily keep track of your GST payments, thereby avoiding penalties.
If you miss paying your taxes now, it can lead to a huge tax bill later. Paying your taxes on time increases your credibility as a taxpayer and helps you ensure complete compliance.
Keep Track Of Financial News
Devote some time every day to keep track of the financial happenings in the country. Since the entire economic spectrum is experiencing a significant change in momentum, it becomes essential to stay updated with the latest news and stay ahead of the curve.
The government has also announced major economic reforms that benefit small and mid-size businesses. By keeping track of financial events, you get access to relevant news that might help your business in these tough times.
Focus On Long-Term Growth
Uncertainties in an economic environment surely reduce investor confidence. Markets are plummeting globally, but bear in mind that this is just a short economic downturn. If you make investments through SIPs, now is not the right time to stop.
Don’t make major changes to your investment portfolio for short-term gains, as this may jeopardise your long-term financial security. The market will eventually bounce back, but the loss that your pre-mature withdrawal incurs won’t.
Conclusion
The lockdown has stopped the economic momentum and severely affected businesses around the county. You must take the required steps that can help you in minimising the attrition to your company and ensure smooth navigation in these tough times.
If you follow these steps now, it will become really easy for you to ensure financial stability whenever the next recession hits. You must start taking the required steps so that you remain in a prime position for when things start getting better.
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