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10 Personal Finance Lessons to Learn From the Covid-19 Pandemic

Written by - Akshatha Sajumon

February 9, 2022 7 minutes

Since the onset of the Covid-19 pandemic, we are constantly under the threat of more uncertain times to come. It has had an unprecedented impact on millions of lives and people’s livelihoods across the globe. The Indian economy, in particular, witnessed a recession like never before in the preceding 4 decades. Apart from taking care of one’s health, this pandemic has taught us a few lessons on managing our personal finances well. 

Here, we share the top 10 personal finance lessons that emerged from the impact of the pandemic and that we must remember for a long time to come.

10 personal lessons to learn from Covid -19

1. Liquidity is key

The pandemic has reiterated the importance of an emergency fund as apart from job losses, medical costs pertaining to Covid-19 remain unaffordable for most. With an emergency fund, an investor won’t have to sell his investments at unreasonable prices and can instead hold on to the investments for a longer duration. Investors who maintained a portion of their portfolio in cash form did not panic as the stock markets crashed in early 2020. Thus, the lesson to be learnt is that one must park a minimum of 6 months’ worth of living expenses in Liquid or Overnight Funds or in any easy to withdraw instrument.

2. Investing in financial assets over physical assets

Liquid financial assets have proven to be saviours for many during this crisis period. Those who concentrated their investment in physical gold or real estate found it difficult to liquidate these investments to meet expense needs due to job loss or hospitalization. Especially during lockdowns, liquidating such assets became nearly impossible. Shares and debentures listed on stock exchanges or as part of mutual fund units could be easily liquidated. Therefore, it makes sense to invest in financial assets like Gold ETFs instead of investing in physical Gold.

3. Importance of asset allocation

The most important aspect about personal finance that challenged many during this tough time was appropriate asset allocation. Equity investments saw a fall during the onset of the pandemic while gold went upwards and debt offered stability. This taught us that a good portfolio is one that has a mix of all these asset classes. 

4. Focus on financial goals

If we focus on our financial goals even during setbacks, these can help us recover and stay on track. It is ok to delay goals or make amendments, but never get rid of specific financial goals. For example, you may have a goal to become debt-free, however, a need for hospitalization arising from the pandemic may delay the goal. This should not stop you from keeping an eye on it and eventually achieving it. Such situations teach us that it is better to alter the financial plans, but never lose sight of them.

5. Don’t let fear affect financial planning

The pandemic has caused enough fear among investors to an extent that people started taking financial decisions under the spell of fear. This can be hazardous for financial health. Market movements should be considered from a long-term perspective to make the most of the investments. Also, a SIP or Systematic Investment Plan can prove beneficial in controlling one’s emotions during such tough times. This is because the money is invested periodically in a disciplined manner, irrespective of market movements.

6. Seek professional help for investment planning

With the pandemic still looming around, many investors fall for temptations or get distracted from their financial goals. A good professional help like an investment adviser can ensure that an investor stays on track with personal financial goals and achieves them in the long run despite difficult present situations.

7. Health insurance is important 

One important lesson from COVID-19 is the requirement for sufficient health cover. Before COVID-19, not many people took health insurance seriously. A lot many ignored personal health insurance because of the presence of group insurance cover through employers. However, group insurance covers are not applicable when a person loses his/her job. This was experienced by many during the initial days of the pandemic and subsequent lockdown.

As hospitalization bills went up to lakhs of rupees for many, the existing group health covers proved insufficient. The learning therefore is that people should not see medical insurance as an avoidable expenditure and consider it as an essential investment.

8. Always invest in life insurance

COVID-19 has taught us that life is fragile. As unemployment and untimely deaths took away the breadwinners of many families across the country, people are beginning to understand the importance of buying the right life insurance. Pure protection term plans that were once considered worthless are now sought after. 

9. Prioritise needs over wants 

With pay cuts and job losses, many households started setting budgets for themselves. The pandemic has taught people to live within budgets and prioritise needs over wants. Many people face an uncertain future due to income loss. This has made them avoid unnecessary expenses. 

10. Plan as per current income

With many people experiencing loss of income due to the pandemic-affected economy, an important lesson learnt is that one should avoid making plans as per expected future income. People often made plans of buying a home, vehicle or other big-ticket expenses as per their future income expectations. However, COVID-19 resulted in situations where people had to use the moratorium on loan EMIs as their incomes went down and were far from their expectations.


It is important to remember these lessons for a longer-term even if a pandemic-like situation does not repeat in the future. These lessons may come handy in another crisis that could come in a different form and affect lives or livelihoods in a different way.


  1. How do you manage personal finance during this pandemic?
    To effectively manage personal finance during the ongoing pandemic, you must weigh your needs against wants and prioritise savings/investments. It is also important to park some funds in health and life insurance to safeguard against financial drain due to medical expenditures.
  1. Why do we need personal finance?
    Personal finance is important to ensure that one has sufficient funds to meet expense requirements. It helps organise personal funds such that it results in capital appreciation and regular flow of income.
  1. Should I redeem my investment during a market crash resulting from Covid-19?
    It is important to consider personal financial goals against redemption timelines instead of redeeming an investment because of a market crash. Market fluctuations are temporary. Therefore, redemption out of panic during such situations can result in losses.
  1. How can I build my existing savings?
    To build your existing savings, you must invest a portion of the available funds in income generating avenues such as mutual funds, bank deposits, fixed-income instruments, etc. These can help in capital appreciation as well as regular income flow.
  1. Are mutual funds a safe investment during Covid-19 pandemic?
  2. Mutual funds come with different risk levels and an investor must consider the risk rating of the fund against personal risk-taking ability before selecting one. The ongoing pandemic has shown that investing in liquid financial avenues can be beneficial to meet any urgent cash requirements.

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