THE HOUSEHOLD FINANCIAL MANAGEMENT DURING THE COVID PANDEMIC – A COMPARATIVE ANALYSIS

Abstract

The global economy now could be in a very crisis. The coronavirus has taken its toll on society-both on the health of the individual and disruption of economic activity. The virus has pushed all the nations into crisis ever before and private finance is under stress. This crisis might be bigger than the global financial crisis of 2008-09. Now entire nations are in a recession. Undoubtedly our household and or personal finance won't be immune to this crisis. It is found that Individual incomes have been affected by the spread of COVID-19 [1]. Even stock market return was also being sensitive to Coronavirus [2]. Interestingly individuals were found to take more risks in economic upturn [3]. But individuals should learn personal financial planning and strategies and their implementation which helps not only personal financial management but also the nation’s development [4]. Three behavioral parameters i.e., budgeting, funding, and saving are important particularly in a crisis [5] in addition financial literacy is also important to manage the finance during the crisis [6]. Most of the individuals do not find remedies to get out of a difficult situation like current crisis [7]. Therefore, in an environment like this, one must return to basics and ensure that we've got sound budget in situ. Hence, an appropriate financial planning and management may be a must to survive through this crisis and facilitate your to come back out of this crisis. The current paper has formed a trial to understand the impact on household finance, what was savings, priorities of spending, expenses, and incomes before and after this pandemic situation. This paper will help households in making an appropriate budget and suggest possible solutions to survive through this crisis.

The objective of the Study:

The objective of the study is to understand financial behavior before and during the Covid Pandemic and to know the impact of the Covid Pandemic on it. Further, to make certain suggestions to better personal financial management.

Hypothesis:

• There is no difference in the financial behaviour of households before and during Covid Pandemic
• There is no impact of Covid Pandemic on the financial behaviour of households

Materials and Methods: This Study conducted during April, 2021. A descriptive research design was undertaken to meet the objective(s) of the study, study was conducted taking 192 respondents into account which is sample for the study. Descriptive statistics such as frequencies, percentages, means and standard deviation are used. Further, paired t-test was applied to know whether the mean difference between financial behaviour of individuals before and during the pandemic.

Results and Discussions: It is found from the analysis that the respondents were exposed to negative impact on the income they earned during the Covid pandemic crisis in comparison to the normal situation. The mean income before pandemic was Rs. 42,580 per month and during the pandemic Rs. 31,250 per household. It is clear that around 30% of income has come down during the pandemic. It is clear from the analysis that there was a significant difference in incomes of respondents before and during the Covid pandemic crisis. The reasons for such difference may be, due to job cuts, cut-down in salaries, no business, no work etc., during the pandemic. Together this analysis suggests that pandemic situation has affected household incomes significantly negative. The respondents were asked to indicate what percentage of income they used to spend before Covid pandemic and during the pandemic on various elements like health, education, Basic needs, insurance, EMIs of loans including credit card payments and savings. Respondents preferred to spend more on health and insurance as they treated these are most important in current scenario.

Further, respondents were asked to give the rankings for the elements based on their preference so that it can rank the said elements using their preferences. Health stood top among all the six elements with the top score 948 and got rank one. Insurance grabbed fifth and last ranks. It is also enquired respondents, what could be tha ideal savings to safe guard their family and their needs during the pandemic. It is found that respondents were not shown enough confident in managing their finance during the crisis and their savings were not enough to safeguard them from this pandemic crisis.

The study made suggestions to better the household's financial management during the pandemic like prioritizing the spending, carefully handle the credit payment, use of emergency funds or savings, and discuss with family members about changes in savings.

Research implications: The study identifies the need for better understanding and management of household finance during the crisis. The sample size of the current study is limited; future studies could consider large samples to gain deeper insights. Such studies definitely help individuals to manage their finances in a better manner. It also suggests policies and measures to help governments effectively deal with future crises