How 2020 changed our money lives !

January 06, 2021

How 2020 changed our money lives ! 

The Covid-19 pandemic hit us in March and ever since then, it’s been a roller coaster ride. And our finances have been impacted too this year and big time. Life in pandemic began as equity markets, namely the S&P BSE Sensex, fell sharply by 38 percent between January and March 23, its lowest point post the pandemic shock. But due to the gush of liquidity and eventually investors taking on to direct equities due to staying at home, money came back in stock markets. Between March 23 and December 21, the S&P BSE Sensex went up by 75 percent and equity markets touched all-time highs a few days back.

Interest rates fell. This helped long-term debt funds but investors in small-saving schemes got hurt. But small saving schemes still remain attractive for the retired.


On the personal front, many jobs were lost, income was curtailed because of the lockdowns and our health costs shot up. But the government and finance sector regulators stepped in to help out those who needed the cash. Some of us sailed smoothly, some of us got impacted. It was time to go back the basics.


First off, the year 2020 taught us the importance of having emergency cash. This is the corpus to be set aside in case of an emergency. Financial experts say that this pot of money should be equal to your living expenses for atleast six months. These are expenses you just cannot get out of; your food, groceries, children’s school or college fees, your health insurance premiums, any loan installments you might be paying every month and so on.

The second big lesson we learnt was the need to have health insurance. Covid-19 came out of nowhere and attacked people across age groups and sexes. No group was spared. Hospital bills went up. Those who had sufficient health insurance policies atleast got their hospital bills covered.

Financial regulators stepped in. The capital market regulator, Securities and Exchange Board of India announced many measures. The insurance sector regulator asked insurance companies to launch standardised policies in all major categories like a standard term plan and a standard health insurance plan. In addition, it also launched two standardised Coronavirus related health insurance policies and a vector diseases health insurance policy to cover the cost of hospitalisation caused by vector-borne ailments like Dengue and Malaria.


Giving relief to borrowers who found it difficult to repay their loans in the pandemic due to loss of jobs and income, the Reserve Bank of India (RBI) gave moratorium on loans. Initially, the moratorium was given for three months beginning March, but later the scheme was extended and finally came to a close in September. Later, the government of India announced a waiver of compound interest that was payable by the borrowers who had opted for loan moratorium between March 1, 2020, and August 31, 2020.


That said, we are not out of the woods yet. Nobody knows how 2021 will pan out, though we hope it turns out to be better than the year 2020. Nevertheless, stay safe and take care of your finances. Remember: your expenses must always be lesser than your income, start saving if you haven’t been saving already and take investment risks commensurate to what you can withstand.



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