Are you keeping a check on your finances in the post pandemic world?

Shreya Bhattacharya, a 31-year-old architect based in Delhi is a food connoisseur. From fine dining experiences to trying out new street-side kiosks, Mukherjee’s recreational activities have always centered around food. However, in the last two years when human lives have oscillated between periods of normalcy and episodes of confinement filled with fear, recreational activities for Mukherjee were pushed to the backseat.“In the past two years, the pandemic lifestyle made me acknowledge that it is not that hard to keep expenses on non-essentials in check. Yes, I was missing my culinary escapades because I firmly believe that nothing connects people better than deliciously cooked food but my finances looked shockingly healthier. Its not that I am bad with money management but the combined effect of all the money saved because of being stuck at home, gave me a newfound perspective about spending on recreational activities,” narrates Bhattacharya.While Bhattacharya may have found an opportunity because of the pandemic to unlearn and relearn a few aspects of keeping finances in order, the ebbing of the threat of infections and the return to a mask-free mode of existence has caused Bhattacharya to start inching back to her old ways. “There is an awareness that I shouldn’t be spending so much and I do remember how my monetary situation had improved during the lockdown because of the money I saved by eating at home for days on end. But there is also this childlike excitement that I am feeling now that life is pretty much normal. A small voice in my head tells me, ‘After two long years of abstention, it is okay to have some fun,’ but I need to strike a balance,” Bhattacharya says.India’s steadily declining COVID case count has led the central government and state governments to largely ease COVID restrictions that have been in place for two years. Children have started thronging schools, workplaces no longer bear haunted appearances and recreational activities are back in full swing. Being able to lead normal lives after two years that were scarred by the pandemic is nothing less than a dream come true. However, the return to normalcy is proving to be a slightly slippery slope especially for the millennials and the younger generation because judicious use of monetary resources may need extra efforts owing to the temptation to spend on experiences that have been out of bound for two years.Preeti Zende, founder of Apna Dhan Financial Services says, “The pandemic has been a dark phase in everyone’s lives with its impact being felt by different socioeconomic groups in varying ways and degrees. For many of us who were more fortunate to not have faced major income disruption, COVID made us stay at home and embrace a simpler lifestyle where money was spent only on needs such as groceries, utility bills and medicines. All discretionary spends such as money spent on shopping, vacations or dining out or recreation were mostly tapered down. Now when things are getting normal and all restrictions have been lifted, the temptation to make up for the lost time is strong. As such it is important for all of us to be extra cautious if we are doing enough for our financial goals.”For Bhattacharya, constant reminders about her goals, especially the medium and long term goals have helped her in keeping a track of her expenses on her ‘wants’. “In the last two months, I have gone all out with my recreational expeditions but a subsequent period of sharp stinging guilt made me commit to a carefully-crafted budget plan so that my investments stayed on track. I also invested in short-term debt funds because I aim to take a vacation abroad in the second half of the year and unlike pre-pandemic times, I have realized investing in short-term liquid funds is way better than swiping your credit cards for your vacation,” she explains.Zende advises segregating a chunk of your money as soon as your salary gets credited to minimize the chances of giving into your temptations. “As soon as your salary gets credited, transfer an amount that you need for your investments to a different bank account called ‘Investment account’ through which you can invest this amount for your financial goals without spending it elsewhere. If you have excess savings in your bank account and are finding it hard to control your spending on your ‘wants’ then transfer that amount in an arbitrage fund. Through this you can set up a systematic transfer plan (STP) to invest in Nifty funds or flexi cap funds for long term goals.”During periods of excessive spending, your saving and investing exercise for maintaining your emergency fund can also take a hit. Zende suggests, “If you are keeping money for an emergency fund but are now worried about any excess spending, immediately shift that amount to a linked bank FD or in a liquid fund to protect that amount. If the situation warrants, keep your credit card locked up in a cupboard for some days so you do not end up spending on unnecessary items.”Avoiding knee-jerk reactions with your purchases can also ease up some monetary room for you, Zende opines. She explains, “Always make a list of the things you want and then think twice about the money you will have to spend on it. Then try to accumulate a similar amount for those goals in the coming months rather than spending your savings for the same. An SIP in a liquid or an arbitrage fund is handy for this purpose. This way you can control instant gratification as well as make a habit to fund for any extra spending rather than depleting your savings.”Key Takeaways- Keep a tab on your credit utilization rate if you have been on a swiping spree. As a thumb rule your credit utilization rate should not exceed 30 percent.- Develop a habit of tracking every single expense even if it seems inconsequential. This will prevent you from landing in scenarios where the condition of your finances comes as a rude shock to you.- Investing in short-term liquid funds for expenses like vacations- Have excess savings in your bank account and find it hard to control your spending on your ‘wants’? Transfer that amount in an arbitrage fund. Through this you can set up a systematic transfer plan (STP) to invest in Nifty funds or flexi cap funds for long term goals.This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.