Simple financial hacks to combat an unexpected economic crash

Imagine our world as an ultra-large, planet-sized mechanical clock with a million moving parts. All our offices, industries, markets, economies, etc. are like individual gears that are involved in a delicate dance-like routine with one another. Each small gear feeds into the larger one, until all of them are moving in tandem to produce time, or in this case, money. After all, in the world we live in, time IS money.

It normally takes 7.5 billion people to run this clock. But suddenly, with the outbreak of the COVID-19 virus, all the heavy machinery operators have been forced into their homes. Naturally, the clock has stopped working, and there is no generation of money. The obligation to pay salaries, subsidize rent, etc. are justified and even warranted in the short run, but with the overall lack of income generation, this is not a sustainable solution.

It is our responsibility to learn from this crisis and empower ourselves to be financially independent in case of another such predicament in the future. Therefore, here are some financial hacks to combat an unexpected economic crash -

1) Making a saving and investment plan -

Every family should spend time deciding upon a sound saving and investment plan commensurate with its lifestyle. A certain percentage of the income should be set aside as an emergency fund for rainy days like these.

One could follow the 50-30-20 rule devised by Elizabeth Warren where she recommends that families spend 50% of their incomes on basic needs like housing, food, and electricity, 30% on wants and desires, and save the rest of the 20%. While this is a good template, the proportions should depend on the short term and long term goals of the family.

2) Rationing resources -

Indiscriminate use of resources is no longer a possibility even if one has immense disposable income. We saw this phenomenon recently with items like face masks, gloves, toilet paper, etc. Panic buying and hoarding led to empty supermarket shelves, and the demand couldn’t be met fast enough by suppliers. As a result, prices of these items also saw a sharp rise and black markets developed.

Minimizing wastage and rationing are in the best interest of everyone to ensure moderate prices and adequate supply.

3) Setting up digital banking and payments -

The government of India recently launched a campaign to encourage the digitization of payments, and banking. Because of its hassle free, quick, and traceable nature, digital banking is not only a convenient alternative, but also a necessity in the current climate.

It is possible to order groceries, food, and other essential supplies through apps that accept digital payments. This eliminates the need for physical exchange of cash, and thus minimizes contact. Digital banking also ensures that logistical issues associated with visiting a bank aren’t the reasons for our lives and work getting hampered.

4) Being cognizant of one’s spending -

A convenient way of monitoring spending is through budgeting. We may get swayed when using credit cards and applications like PayTM because we do not see the physical drain of cash. This often leads to overspending.

Budgeting apps like Mint and Mvelopes help us keep tabs on our spending by pulling the information from our bank accounts and summarizing them. By bucketing our expenses into categories that are easier to read, we can make decisions on where spending can be cut.

5) Formulating a business continuity plan -

It is imperative that we use this crisis as a learning opportunity and prepare ourselves to handle such situations better in the future. Companies and individuals should create business continuity plans whereby they can work remotely from home in case of emergencies.

This may be an expensive affair, but it would be the equivalent of spending on insurance. Enhancing technology, and investing in take-home laptops will also boost employee morale and efficiency.


In these trying times, we must not be penny wise, pound foolish. We tend to think that catastrophe won’t strike us, until it does. Keeping aside an emergency fund and being prepared are the only ways we can hedge our losses.