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Financial
Financial distress and COVID-19: distress and
evidence from working COVID-19

individuals in India
Kirti Goyal and Satish Kumar 503
Department of Management Studies, Malaviya National Institute of Technology,
Jaipur, India Received 13 August 2020
Revised 3 February 2021
10 March 2021
Purnima Rao Accepted 11 March 2021
Fortune Institute of International Business, New Delhi, India
Sisira Colombage
Associate Professor and Discipline Head, Department of Accounting and Finance,
Federation Business School, Federation University Australia,
Ballarat, Australia, and
Ankit Sharma
Department of Finance and Accounting, Chandragupt Institute of Management
Patna, Patna, India

Abstract
Purpose – This study aims to explore the impact of the containment measures during COVID-19 on
individuals’ finances, financial resilience during such distress and identifying the most financially vulnerable
among them. Tracing such impact during the pandemic has been challenging due to a lack of representative
data. This paper addresses this gap in the present study.
Design/methodology/approach – A survey has been conducted using a structured questionnaire
containing various items that portray the impact on income, spending, saving, investment, borrowing,
insurance and retirement. The sample consists of 699 respondents and purposive and snowball sampling has
been used for data collection. The results are presented and analyzed using infographics and frequency
distributions. This study conducts an analysis of variance and Chi-square tests for significance.
Findings – This paper finds a fall in income and limited ability to cope with the current economic conditions. The
survey highlights inadequate savings and insurance, weak retirement planning, outstanding loans and under-
diversified investments inhibiting financial resilience even among the higher-income group. Particularly, lower-
income strata, women and not much educated are most financially vulnerable. Further, no substantial financial
benefits have been received from the government and people rely on their usual income sources.
Originality/value – To the best of the authors’ knowledge, this is the first study that measures the
pandemic’s impact on personal finances, especially in connection with a developing economy like India. Policy
interventions are critical to the millions for whom financial literacy is required now more than ever.
Keywords COVID-19, Financial resilience, Financial vulnerability, Personal financial management,
Personal financial survey
Paper type Research paper
Qualitative Research in Financial
Markets
1. Introduction Vol. 13 No. 4, 2021
pp. 503-528
When seeking financial accomplishment, managing personal finances play a vital role. © Emerald Publishing Limited
1755-4179
“Personal financial management is the study of personal and family resources considered DOI 10.1108/QRFM-08-2020-0159
QRFM important in achieving financial success; it involves how people spend, save, protect and
13,4 invest their financial resources” (Garman and Forgue, 2011, p. 4). The repercussions of any
financial contingency can be a wake-up call for many scratching their heads over their
finances. Management of personal finances is often intimidating, which causes individuals
to avoid it, leading to false decisions and, ultimately, poor financial health (Boon et al., 2011).
The thought of facing a sudden adverse event that could disturb an individual’s family
504 finances such as a job loss, an illness or an income fall, becomes less threatening if the funds
are properly planned (West and Worthington, 2019).
There is vast empirical evidence regarding the role of managing finances in predictable
events such as buying a house or a car and unpredictable events such as loss of a job or
health issues (Kidwell and Turrisi, 2004; Copur and Gutter, 2019). Loss of job when
unanticipated is a significant life event that affects personal wealth and causes financial
stress (Stavrunova and Yerokhin, 2008). A number of studies reveal the economic impact
resulting from a financial crisis due to uncertain events (Oni et al., 2002; McKibbin and
Sidorenko, 2006; Greasley et al., 2001; O’Neill and Xiao, 2012). People must plan their
finances in a way that they can comfort their lives in an ordinary situation and also come out
of extraordinary circumstances without much harm. The COVID-19 is taking the shape of
that “extraordinary circumstance” which may push people to look at their overall financial
picture and visualize the importance of being financially informed. The spread of the
pandemic and sudden disruption of economic activities as a policy measure has disordered
many worldwide lives. As per the New York Times, India went into one of the biggest
lockdowns in the world confining 1.3 billion population to their homes that exceeded the size
of those that were imposed in China (0.76 billion) even at the peak of the epidemic there
(Singh et al., 2020). Figure 1 shows the lockdown timeline of India and the nature of each
phase of lockdown implemented. India’s population is 1.3 billion and the total number of
confirmed cases as of June 12, 2020, is 297,535 as per the World Health Organization (WHO).
While only 0.02% of India’s total population is infected with COVID-19, 99.98% of the
population faces financial distress in their lives and well-being. According to an estimation
by the International Labor Organization (ILO), the COVID-19 pandemic is likely to raise
unemployment by 25 million, which is even worse than unemployment levels (22 million)
during the global financial crisis in 2008.
With uncertainty looming around peoples’ financial ability to meet their personal
financial requirements, carefully managing their finances seem to be the only way to tide
over these tough times (Salignac et al., 2019). While those with adequate financial cushion
will confront this economic shock and support their consumption, others may have to cut
their household expenses. Not only low but middle-income individuals may also find it
difficult to meet ends as 1 in 5 of such individuals spends more than they earn across the
OECD countries (OECD, 2020).
This pandemic reminds every individual to have a robust financial plan considering the
risk to appetite, patterns of savings and resilience to income shocks. This unique study
exploring the impact of COVID-19 on the finances of individuals in India is necessary to
identify actions to minimize the detrimental effects of financial damage caused by the
pandemic. As the people proceed from fear to a gradual recovery, the questions on personal
finances after the epidemic are apparent. Such results have important implications for
financial educators, counselors and advisors who can take appropriate actions to enhance
financial literacy among the population. Identifying the most financially vulnerable
population during the crisis would help policymakers and educators target the population
through specific financial education programs. Collecting and analyzing data about the
COVID-19 crisis, without doubt, has a momentous value both now and forthcoming policies
 Financial
Phase 1: March 25, 2020 - April 14, 2020 (21 days)
distress and
x Suspension of all production and services. COVID-19
x Closure of all shops except medical, hospitals, banking institutions, grocery and other
essential services.
x Strict ban on people from stepping out.
x Closure of all commercial and private workplaces (work-from-home started).
x Closure of all schools and colleges.
x Freezing of all non-essential public as well as private transport.
505
x Closure of all entertainment, sports, cultural and religious activities.

Phase 2: April 15, 2020 – May 3, 2020 (19 days)

x Same as phase 1 with a conditional relaxation for the regions where the spread
had been contained.
x Classification of lockdown areas as “red zone”, indicating hotspots, “orange
zone” indicating fewer cases, and “green zone” with no infection case.
x Cargo transportation was allowed to run.
x Agricultural businesses and shops selling farming supplies were allowed to
open.

Phase 3: May 4, 2020 – May 17, 2020 (14 days)

x Only green zones were allowed normal movement and buses started with
only 50 percent capacity.
x Orange zones were allowed only private and hired vehicles but not public
transportation.
x Red zone under complete lockdown.

Phase 4: May 18, 2020 – May 31, 2020 (14 days)

x States were given their discretion in the declaration of Green,

Orange and Red zones and the implementation framework.
x Red zones were further classified into containment and buffer zones
as per the demarcation given by the local authorities.

Phase 5: June 1, 2020 – 30 June, 2020 (30 days)

x Lockdown restrictions would be continued in containment

areas, while other zones would be permitted to start
activities. It is called “Unlock 1” phase.
x Still, ban on large gatherings continues.
x Night curfews from 9 p.m. to 5 a.m.

Figure 1.
Note: This table shows the various phases of lockdown during
COVID-19 lockdown
COVID-19 in India timeline in India
Source: Bansal and Hasin (2020)

and research. In an unprecedented global crisis like COVID-19, it would be appropriate to

understand the nitty-gritty of economic effect this pandemic has on individuals. This study
seeks to answer the following research questions:

RQ1. What is the impact of COVID-19 on the personal finances of individuals?

RQ2. What is the level of financial resilience and financial health status in the face of
economic uncertainty caused by pandemic?
RQ3. Who is the most vulnerable during a sudden economic downturn?
QRFM In this paper, using a survey approach via structured questionnaire, we examined the
13,4 impact on income, spending, saving, investment, borrowing, insurance and retirement on a
sample of 699 individuals across India. The study results reveal a fall in income and limited
ability to cope with the current economic conditions. The survey highlights inadequate
savings and insurance, weak retirement planning, outstanding loans and under-diversified
investments inhibiting financial resilience even among the higher-income group.
506 Particularly, lower-income strata, women and not much educated are most financially
vulnerable. Further, no substantial financial benefits have been received from the
government and people rely on their usual income sources. This descriptive study is an
early attempt to measure the impact on individuals’ finances during such turmoil. This
empirical evidence contributes toward connecting theoretical insights in the extant literature
on financial resilience, financial fragility and financial knowledge. This study can help
inform policymakers on how to ameliorate the pandemic’s adverse impacts in the best way
possible.
The remainder of the paper is structured as follows: Section 2 outlines the study’s
theoretical and empirical background, followed by Section 3 on the study’s research design.
Section 4 discusses the results and findings. Section 5 concludes the study and discusses
policy implications.

2. Background
2.1 Theoretical evidence
Keynes (1936) identified eight reasons for saving from which precautionary motive is
emphasized in this study. This motive is for building up a reserve against unforeseen
contingencies. According to the Life-Cycle Hypothesis model, individuals generally save to
smooth consumption over the life cycle as there may be changes in income due to
unexpected events of job loss and death (Modigliani and Brumberg, 1954). According to the
theory on buffer stock of wealth, risk-averse individuals tend to accumulate wealth to
protect themselves against shocks (Deaton, 1992; Carroll, 1997). The most prevalent
methods of overcoming financial stress are using saved money and cutting household
expenses (Varcoe, 1990). As focused on the literature in sociology, individuals could also rely
on family and friends to bear unprecedented shocks (Sarkasian and Gerstel, 2004; Harknett
and Knab, 2007). However, due to the complexity of human nature, many factors such as
their income and wealth, along with various demographic and socio-economic
characteristics, may affect an individual’s choices, capacity to save and ability to cope with
shocks. The timely assessment of peoples’ ability to cope with financial shocks and
identifying their vulnerability encourages us to introduce the concept of “financial
resilience.” According to Salignac et al. (2019, p. 5), “Financial resilience is an individual’s
ability to access and draw on internal capabilities and appropriate, acceptable and
accessible external resources and supports in times of financial adversity.” In other words,
resilience is an individual’s capacity to “bounce back after adverse events and experiences,
to readjust to changing circumstances and to deal with environmental stress” (Abbott-
Chapman et al., 2008, p. 612). A higher level of debt by an individual makes it financially
fragile or vulnerable, especially when faced with adverse shocks (Jappelli et al., 2013).
Financially vulnerable individuals are unable to meet ends or bear unexpected expenses
when faced with a loss of a job or sudden economic shock (Anderloni et al., 2012).
According to the crisis theory, a crisis exists when the problem is more complicated than
the availability of resources to deal with it (Caplan, 1964). An economic crisis may lead to
financial instability in the form of changes in income, expenses, investments, retirement
wealth and debt level thereby leading to a crunch of resources while consumption remaining
unchanged. Any economic crisis calls for careful decisions that help individuals fortify their Financial
finances and come out of the crisis without any harm through efficient personal financial distress and
management. The question of how people manage their finances demands a deeper
understanding of the interplay among better planning, budgeting, savings, avoiding
COVID-19
defaults and managing risk (Lynch, 2011).

2.2 Empirical evidence

An individual’s portfolio determines how smoothly it responds to a significant event that
507
has a short and long-term financial impact in the short and long run (West and Worthington,
2019). Much empirical work uses data from surveys focusing on financial distress (Del Rio
and Young, 2008; Christelis et al., 2010). India is a densely populated nation that lacks the
primitive skills to make basic financial decisions (Agarwal et al., 2015). Besides this, most of
the Indians do not have sufficient financial access. This lack of financial literacy and
financial access could result in welfare reducing financial decisions. According to the RBI
report on household finance (RBI, 2017), the average Indian household holds a major chunk
of its wealth in real estate (84%), physical gold (11%) and the rest in financial assets (5%).
Retirement accounts hold a very limited part in household balance sheets in contrast to
advanced economies where households hold more financial assets and allocate a sizeable
wealth in retirement accounts. The variation in demographics and personal income explain
almost negligible reasons for such disparities. Rest can be attributed to the differences in
financial behavior. Further, India does not have full-fledged job loss insurance in place at the
moment. In the US, individual states provide unemployment insurance. In India, people
earning low incomes should ideally be getting financial support from the government.
Employers should pay some sort of “Payroll Tax” to the government annually, which
should be an agreed percentage of the total salary bills. Such schemes can be administered
by a government department like EPFO.
Lusardi et al. (2011) pointed out the lack of emergency savings in all parts of the world.
Their findings pointed out that almost half of the sampled US population were not sure
about coming up with $2,000 in a month in case of emergency. Apart from savings, there is
evidence of changes in individual investor’s behavior during the financial crisis (Hoffmann
et al., 2013). Investor’s expectations about returns and risk tolerance decline when the crisis
is at its worst. Individuals also show poor investment behavior by selling those assets that
have lost value during the financial downturn due to a low level of financial literacy (Bucher-
Koenen and Ziegelmeyer, 2014).
While the majority of the previous studies have explored personal financial management
from the point of view of advanced economies (Eberhardt et al., 2019; Topa et al., 2018), little
work exists from the developing country perspective (Agarwal et al., 2015; Chandra et al.,
2017).
A large number of empirical evidence reveals that many people hold almost no assets
and no precautionary savings and are most vulnerable to economic shock (Caner and Wolff,
2004; Sherraden, 2005). Further, asset holdings and savings by individuals are not the only
way to cushion themselves against shocks. Individuals could also take credit via credit
cards, home equity lines of credit or borrowings on retirement accounts.
From the Great Depression of 1932 to the global financial crisis of 2008, there have been
several studies on the effects of economic shocks on personal financial management. A
study on income uncertainty and consumer spending during the Great Depression of 1932
states that the crisis causes uncertainty in income, sustained consumption and spending
downturn (Greasley et al., 2001). Another study on the impact of the East Asian Economic
Crisis of 1997–2001 emphasizes on the importance of social safety nets in minimizing its
QRFM financial impact on health (Hopkins, 2006). A survey of 1,488 respondents conducted by the
13,4 FINRA Investor Education Foundation on the impact of the financial crisis of 2008 revealed
that almost half of them were facing difficulty in paying their monthly bills and most of
them did not set aside emergency funds to cope up with unforeseen events (FINRA, 2009).
Another study by O’Neill and Xiao (2012) on the global crisis of 2008 examined three
behaviors (saving, budgeting and spending) and reported higher scores on all the behaviors
508 after the crisis started.
The COVID-19 is called a “Great Lockdown” recession, which seems to be worse than the
“Global Recession” (Gopinath, 2020) due to its effects resulting in income shocks and
potential job losses. Recently, Fan et al. (2018, p. 1) emphasized “an unmet need for greater
investment in preparedness against major epidemics and pandemics.” However, as a part of
personal finance, there is little attention to the studies investigating precisely how
individuals manage their finances during rare life events. There is much literature regarding
foreseen events such as retirement planning (Chase et al., 2011), but less is known about
unforeseen events where individuals’ existing financial plans may not work (Angerer and
Lam, 2009; Gomes and Michaelides, 2005). A number of studies reveal the considerable
economic impact resulting due to AIDS/HIV (Cuddington, 1993; Oni et al., 2002), Influenza
pandemic in the USA (Meltzer et al., 1999), Spanish Flu (McKibbin and Sidorenko, 2006),
Ebola (Kostova et al., 2019) and COVID-19 (Mckibbin and Fernando, 2020). There is enough
literature on how the COVID–19 is impacting the financial markets and economy and how it
has turned up as a financial contagion (Akhtaruzzaman et al., 2020; Corbet et al., 2020;
Devpura and Narayan, 2020; Folger-Laronde et al., 2020; He and Harris, 2020; Mensi et al.,
2020). The literature on the economic impact of the COVID-19 pandemic on individual
finances is still budding (Baker et al., 2020; Hanspal et al., 2020; Bu et al., 2020). Baker et al.
(2020) used household financial data to explore the impact of the COVID-19 outbreak on
household consumption. They found that household spending sharply declined as a result of
social distancing measures. Hanspal et al. (2020) surveyed a sample of 8,000 US households
to examine the impact of COVID-19 on household income and retirement funds and how
they make economic choices during this time. They found that wealth shocks are more
prominent in middle-aged individuals and expectations about household expenses are
affected by income shocks and not by wealth shocks. Bu et al. (2020) use data from a panel of
respondents in China and found a significant fall in risk-taking due to changes in beliefs that
originated from the pandemic. There are a few studies on the economic impact of COVID-19
in the Indian context (Dev and Sengupta, 2020). We contribute to the existing literature by
providing first documentation of the impact of the COVID-19 pandemic crisis on Indian
individuals’ finances concerning income, expenditure, savings, investments, borrowing,
insurance and retirement. We further explore the prior preparedness and coping strategies
of Indians to deal with the crisis and identify the segments most vulnerable to this economic
shock.

3. Research design
3.1 Sample design
3.1.1 Sample. The study has been conducted on people living in urban areas of the country
and is working primarily in the organized sector. Only those individuals who are working
and have a source of income were considered for the survey. The survey consists of a sample
of individuals spread across all six regions (North, South, East, West, North East and
Central) of India, representing gender, age, level of education, marital status, income and
occupation. The major cities covered by the survey are Delhi, the National Capital Region,
Allahabad, Jaipur, Mumbai, Bangalore, Hyderabad, Chennai, Ahmedabad, Assam and
Kolkata. As the population under consideration is large, therefore, we have used Cochran’s Financial
Formula to finalize the sample size. According to that with a 65% margin of error, the distress and
adequate sample size is 384. In the present research, we have received 723 responses from all
the major cities of India. However, the usable responses were only 699. The sample lies well
COVID-19
within the limit of sample size computed by Cochran’s formula.
3.1.2 Questionnaire. A structured questionnaire for the survey has been designed. The
questionnaire comprising 31 multiple choice questions, yes/no questions, Likert scale
509
questions and is split into seven sections that portray the impact of COVID-19 on various
dimensions (income, spending, saving, investment, borrowing, insurance and retirement) of
an individual’s finance. Each of the survey questions was carefully selected to provide
relevant information on specific aspects of the pandemic’s impact on peoples’ finances. In
the absence of established measures, some of the questions have been included from a
validated “OECD/INFE Toolkit for Measuring Financial Literacy and Financial Inclusion”
(OECD, 2018). Questions on financial instability such as the inability to cover monthly
expenses, paying rent or utility bills examine whether the individuals are “financially
vulnerable” or “financially fragile” (Anderloni et al., 2012). Some questions on individuals’
financial fragility have been taken from Lusardi et al. (2011). The financial resilience
framework by Salignac et al. (2019) has been used to design questions on financial resilience.
The recent surveys carried out on the financial impact of COVID-19 in the US, Spain and
other developed countries (Amin, 2020; Smith, 2020; Oliver et al., 2020) and in India (Afridi
et al., 2020) formed the basis for designing a questionnaire that could be applicable in the
Indian context. The questionnaire was floated to a group of 5 academicians (Associate
professors and Professors in the Finance area) and 4 industry experts (Bankers, financial
planners and investment advisors) who understood the topic for validation. Upon screening
of the questionnaire by the experts, they suggested the addition of few more questions
relating to the sources of funds (emergency savings, selling possessions, formal and
informal borrowings, etc.) and uses of funds (panic buying, home entertainment, internet
facilities, etc.) during a pandemic. An additional question on the financial benefits received
from the government was also recommended. Subsequently, we added the recommended
questions to the final questionnaire. The experts also reviewed the items to ensure that they
are accurate, free from any error and are not likely to result in respondents’ bias. Once
approved by experts on the items, we proceeded to pilot testing on 100 respondents. As we
did not face any problem with the items after pilot testing, the final questionnaire of 31 items
was floated and responses were collected. The main results were similar to the pilot study.
3.1.3 Data collection. The present study is descriptive in nature and used purposive and
snowball sampling. To collect data, we conducted an online survey from May 22, 2020,
through June 20, 2020. The complete information of the survey was kept anonymous to
maintain data integrity and avoid any personal bias. A custom setting was also made in an
online questionnaire limiting only one response per user. It was done to avoid duplicate
responses and ensure the realness of the data. Online questionnaires were shared via e-mails
and on social media platforms (WhatsApp, Facebook, Linked In and Instagram) because of
the advantage of having comprehensive coverage, technology-based (fast and innovative)
and cost-free. As most of the contacts on LinkedIn are professionals and are having a source
of income, they were purposefully targeted to gather the most relevant survey data.
Similarly, individuals (mostly known) who are earning and managing their finances were
targeted on other social media platforms such as WhatsApp, Facebook and Instagram.
They further floated the questionnaire to their known who best suited to participate in the
survey.
QRFM 3.2 Data preparation and analysis method
13,4 Our final data consisted of 699 respondents. The pre-defined research questions navigated
analysis. The infographic representation of survey results disseminates quality results and
is easily understood by a vast audience. We portray variable distributions in frequencies
followed by an analysis of variance (ANOVA) and chi-square tests for significance. The Chi-
square test and ANOVA are both inferential statistics tests that are used in determining
510 either the relationships among variables or differences between groups in our sample data
(Field, 2013). That said, ANOVA is a parametric test that is based on the means of more than
two groups. It deals with a quantitative dependent variable (Interval Scale) with a
categorical grouping variable to compare. For example, if we have to examine whether a
change in financial well-being differs across various income groups, ANOVA is an
appropriate statistical tool. Chi-square test is a non-parametric test that deals with
categorical variables (nominal scale). We used SPSS 25.0 software (IBM Corp, Armonk and
NY) for data analysis.

4. Findings and results

4.1 Sample description
The study has been conducted on 699 individuals across India. Table 1 exhibits the sample
profile of the study. The research units (individuals) have been classified based on their
gender, age, education, marital status, income, source of income, role in financial decision-
making and the regional part of India where they reside.
The data reveals that the sample is skewed toward men (n = 473) (68%) and the majority
of the individuals are less than 45 years (n = 524) (75%). Further, most individuals are either
graduate or post-graduate and are single (n = 417) (60%). The source of income is primarily
through salary (n = 334) (48%) and 29% (n = 201) of individuals are operating their own
business. However, the income stratum is widely distributed across all categories. Most of
the individuals are from East (n = 308) (44%) and North (n = 188) (27%) regions of India
while the percentage of individuals from West (n = 119) (17%), South (n = 56) (8%), Central
(n = 21) (3%) and North East (n = 7) (1%) regions is comparatively lower. Primarily,
individuals take their financial decisions on their own (n = 484) (69%).

4.2 Impact of COVID-19 on personal finances of the individuals

The survey entails the description of the personal finances of Indians. The infographic
representation of survey results noticeably indicates the considerable impact of COVID-19
on individuals’ finances (Figure 2). The usage of different types of charts such as a tornado,
waterfall and combo strikingly explain the aggrieved situation of individuals across India.
The figure shows how income is significantly decreasing compared to expenses which
are increasing rapidly. Apart from mental stress, the crisis has created economic turmoil for
everyone in general. The jolts in the regular income can be felt by everyone, whether an
individual is a business owner, a salaried employee or a freelancer. Further, the overall
sentiments regarding the COVID-19 are negative where individuals have shown their
financial concern due to this ongoing pandemic across the country. Most of the respondents
have either emphasized reduced spending or searching for a new and additional avenue of
earning to combat the fluctuations arising in finances due to the pandemic. Participants
have also started focusing on savings and thereby, looking for new avenues of investment.
Looking at the negative impact of COVID-19, a key concern that arises for many individuals
is how to manage the finances amidst the global crisis in the wake of uncertainty and how to
cope up with the financial crunch. The increase in financial stress causes an overall decline
in financial well-being.
 C. Highest
A. Gender N P(%) B. Age (years) N P(%) education N P(%)

Female 224 32 25–35 422 60 School 88 13

Male 473 68 36–45 102 15 Graduate 260 37
Prefer not to say 2 0.29 46–55 88 13 Post graduate 306 44
56–65 70 10 Doctorate 45 6
66 and above 17 2
Grand total 699 100 Grand total 699 100 Grand total 699 100
D. Marital status N P(%) E. Income (in INR lakhs) N P(%) F. Sources of N P(%)
income
Single 417 60 <2.5 127 18 Salary 334 48
Married 274 39 2.5 to 5 154 22 Business 201 29
Divorced 3 0 >5 to 7.5 142 20 Govt. benefits 17 2
Widow 3 0 >7.5 to 10 94 13 Pension 21 3
Prefer not to say 2 0 >10 182 26 Transfer 109 16
Rental 10 1
Others 7 1
Grand total 699 100 Grand total 699 100 Grand total 699 100
G. Financial decision-maker N P(%)
Self 484 69
In consultation with others 215 31
Grand total 699 100
H. Region (cities) N P(%)
North (Jammu and Kashmir, Himachal Pradesh, Punjab, 188 27
Uttarakhand, Uttar Pradesh, Haryana and Delhi)
South (Andhra Pradesh, Karnataka, Kerala and Tamil Nadu) 56 8
West (Rajasthan, Goa, Gujarat and Maharashtra) 119 17
East (Bihar, Orissa, Jharkhand and West Bengal) 308 44
North East (Assam, Sikkim, Nagaland, Tripura, Meghalaya, 7 1
Manipur, Arunachal Pradesh and Mizoram)
Central (Madhya Pradesh and Chattisgarh) 21 3
Grand total 699 100

Notes: Where N = frequency; P = percentage. This table shows the descriptions of the sample

Table 1.
Sample profile
511
COVID-19
distress and
Financial
QRFM The survey describes the financial challenges faced by the respondents due to this
13,4 pandemic. Primarily, individuals struggle to meet daily expenses along with children’s
school fees and loan payments (Table 2). However, apart from these common reasons, issues
such as borrowings for salary reimbursement (for individuals who are into a business),
deferred salary, maintenance expenses and other contingent expenses are also making
financial issues more worrisome.
512 Table 3 depicts the variation in financial income, expenses, financial well-being and
change in financial concern across different income groups and sources of income. The
survey questions were asked on a five-point Likert scale for the variables mentioned above.

Figure 2.
Infographics
depicting the impact
of COVID-19 on
personal finances

Financial challenges Number (%)

Meeting monthly/daily consumption expenses on necessities 153 22

Making monthly installment payment of my house loan/payment of monthly rent 91 13
Making monthly car payment 16 2
I cannot afford a health/life insurance premium 15 2
My existing debts are piling up 41 6
Making payment of children’s education fees 128 18
Loss of my job 32 5
Others 223 32
Table 2.
Total 699 100
Financial challenges
faced by individuals Note: This table shows the number and the percentages of the respondents facing various financial
during a pandemic challenges
 Change in
Financial
Change in Change in financial Financial distress and
Variables Parameters Stats income expense well-being concern COVID-19
Income <2.5 Mean 4.28 3.39 3.57 4.53
2.5 to 5 4.08 3.40 3.27 4.33
>5 to 7.5 3.97 3.46 3.15 4.12
>7.5 to 10 3.91 3.38 2.86 4.04 513
>10 3.66 3.36 2.85 3.84
Levene’s stats F Stats 0.026 0.00 0.26 0.18
One way 11.225*** 0.18 17.982*** 13.83***
ANOVA
Source of Salary Mean 3.81 3.28 3.03 4.10
income Business 4.26 3.52 3.36 4.31
Govt. benefits 3.71 3.47 3.00 3.82
Pension 3.38 3.38 2.81 3.95
Transfer 4.01 3.54 3.07 4.10 Table 3.
Rental 4.00 2.90 3.50 4.40 Variation in income,
Others 4.57 3.43 3.86 4.43 expense, financial
Levene’s stats F Stats 0.09 0.48 0.36 0.31 well-being and
One way 9.010*** 1.70 5.128*** 2.126** financial concern
ANOVA
among individuals
Notes: Where ***; **significance level at 1% and 5%, respectively. This table shows the changes in income, due to COVID-19
expenses, well-being and financial concern among the sample as a result of the pandemic across income and across income and
sources of income sources of income

For income and expenses, individuals’ agreement has been recorded about the changes in
these variables during the pandemic, where 1 refers to a significant increase and 5 refers to a
significant decrease. The results arrived through One-way ANOVA reveals the statistically
significant difference across all income groups and sources of income except for expenses. It
implies that an increase in expenses is uniform across different groups. Primarily, the
respondents belonging to lower-income stratum are much more concerned as compared to
higher-income strata. This implies that COVID-19 has hit finances of low-income the most
pushing people further into poverty; affluent still better off. Business people and the
individuals receiving incomes from rents and transfers (from family members or others)
have experienced a more adverse effect on their finances due to COVID-19. Hit by the
pandemic slump followed by social distancing and nationwide lockdown, businesses are
experiencing major impacts no matter how established they are and are having to re-look at
how they manage and operate their business. Unfortunately, the impact on small businesses
can be way more brutal as they have scarcer cash reserves and a smaller margin. The ripple
effect will have a key impact on India’s economy due to an eventual halt on the sale of
products and services. This section explains the pandemic’s effect on daily income and
expenses, which noticeably direct toward the distressed financial condition of Indian
individuals.

4.3 The level of financial resilience and financial health status

There is a difference in the individuals’ ability to bounce back from the adverse effects of the
sudden economic downturn. The savings, debt situation, diversification of the portfolio,
ability to raise funds, ability to meet everyday expenses, social support and government
QRFM support are some of the factors that may determine whether an individual is vulnerable or
13,4 resilient to bear the brunt of the sudden economic shocks (Salignac et al., 2019).
4.3.1 Sources and uses of funds during the pandemic and financial benefits from the
government. The survey highlights the sources and uses of funds during the pandemic. The
questions were asked in the form of multiple-choice and respondents can have more than
one choice. Tables 4–6 exhibit the critical sources of funds utilized, the disbursement of
514 funds for different purposes and the government’s financial benefits.

Sources of funds Frequency (%)

Usual major source of income 495 71

Emergency liquid savings 226 32
Selling possessions (shares, bonds, property, precious metals and any other asset) 30 4
Retirement account savings withdrawal 46 7
Borrowing from outside (such as unsecured loans and payday loans) 37 5
Borrowing from banks (such as short-term loans and bank overdraft) 41 6
Borrowing from relatives/friends 88 13
Funds received from government 26 4
Table 4.
Other 8 1
Sources of funds
used during a Notes: This table shows the number and percentages of respondents with respect to various sources of
pandemic funds during the pandemic. The respondents could choose more than one option

Usage of funds in pandemic Frequency (%)

Panic buying of groceries or other household items 330 47

Buying of stocks with the intention of exploiting the downward market trend 65 9
Diversifying investments (safer investment options such as PPF or fixed deposit) 51 7
Improving home infrastructure (such as internet, Netflix and home entertainment) 94 13
Paying off debt/loans 102 15
Basic household expenses such as accommodation, education and electricity 520 74
Table 5.
Usage of funds Notes: This table shows the number and percentages of respondents with respect to the purposes for
during a pandemic which their funds have been used during the pandemic. The respondents could choose more than one option

Financial benefits received from the government Frequency (%)

Rent deferral 16 2
Mortgage deferral 24 3
Children’s education fee deferral 25 4
Allowances 23 3
Unemployment insurance 2 0
Cash benefit 33 5
Table 6.
No financial benefit received 596 85
Financial benefits
received from the Notes: This table shows the number and percentages of respondents with respect to the financial benefits
government received from the government during the pandemic. The respondents could choose more than one option
The survey results reveal that most individuals depend on their usual source of income Financial
during the pandemic (Table 4). However, 32% (n = 226) of them have also used emergency distress and
funds during this period. They are using their emergency pool of funds as a “first line of
defense” to meet the inevitable fixed costs. It is a potential trigger for individuals to recall
COVID-19
the importance of emergency savings and modify their behavior to adversely affect their
financial resilience (Babiarz and Robb, 2014). External borrowings are minimal; however,
free financing (from friends and family) has also been utilized by individuals (n = 88) (13%).
The lockdown time has seen borrowing happening from family and friends due to the 515
flexibility in returning the amount as the pandemic has set a lot of uncertainty in the lives of
people. Incomes are scrunched making people borrow money to run their households.
Further, no substantial benefits have been received from the government, although a fewer
proportion (n = 46) (7%) of the sample have also used retirement savings during COVID-19.
The worsening economic situation means that many employees may be forced to tap into
their retirement savings to stay afloat. Then, while that may provide access to funds now, it
could come back to hurt them in their golden years.
The spending pattern (Table 5) is too skewed toward necessities (n = 520) (74%)
accommodation, education expenses of kids, electricity expenses, etc. It is followed by the
purchase of groceries and household items (n = 330) (47%). However, investment in shares
and other investment avenues have observed minimal share in the application of funds
during the pandemic. However, a few percentages of individuals (n = 102) (15%) and
(n = 94) (13%) have also spent money on paying off debts and improving digital resources
such as internet facility and over the top (OTT) media platforms. There is evidence of panic
buying during the pandemic. After the complete lockdown of 21 days was announced, panic-
stricken individuals started rushing to the grocery stores and medical shops to stock up the
essentials. It also affected the supply mechanism and the prices of various commodities took
an upsurge. Developed economies could still maintain supply chains efficiently but it might
not be that smooth for India because of its semi-organized economic infrastructure.
Table 6 highlights that no financial benefits (n = 596) (85%) have been received from the
government by these individuals that have undergone this survey for research. It shows a
lack of financial resilience in the population in terms of a lack of support from the
government. Only those participants in the economy of India who can subsist on their own
may be able to win back the momentum in the years to come.
4.3.2 Savings and investment. The next section of the survey deals with the savings and
investment of Indian individuals. Savings are the prime source of liquidity in cases of any
unexpected situation. Therefore, Table 7 describes the availability of emergency funds with
Indian families during the COVID-19. The responses have been presented across the
demographics of respondents.
Women (n = 111) (50%) are found to be more active in saving emergency funds than men
(n = 200) (42%). However, the age strata of respondents exhibited equivalence across all
categories approximately in saving money for times of need. With the increase in education
level and income, respondents have been seen to keep more finances for any unexpected
situation. The differences among groups are statistically significant at a 1% level of
significance. The typical rule of thumb of having emergency savings still applies as the
pandemic threatens the country’s economy. An individual wants his emergency fund to be
readily available, which means keeping it in a savings account. However, savings accounts,
even the high-yield ones, are not going to allow for as much growth as investing could. By
keeping three to six months’ worth of expenses in a savings account, one strikes a good
balance between having enough to cover oneself in a bind, but not sacrificing potential
growth one would earn from investing money.
QRFM Variables Parameters No Yes Total Chi-square stats
13,4
Gender Female 113 (50%) 111 (50%) 224 (32%) 4.56***
Male 273 (58%) 200 (42%) 473 (68%)
Prefer not to say 1 (50%) 1 (50%) 2 (0.28%)
Total 387 312 699
Age groups in years 25–35 244 (58%) 178 (42%) 422 (60%) 6.566***
516 36–45 44 (10%) 58 (57%) 102 (15%)
46–55 52 (12%) 36 (41%) 88 (13%)
56–65 37 (9%) 33 (47%) 70 (10%)
66 and above 10 (2%) 7 (41%) 17 (2.4%)
Total 387 312 699
Education School 55 (63%) 33 (38%) 88 (13%) 4.32***
Graduate 147 (57%) 113 (43%) 260 (37%)
Post graduate 165 (54%) 141 (46%) 306 (44%)
Doctorate 20 (44%) 25 (56%) 45 (6%)
Total 387 312 699
Income (INR lakhs) <2.5 88 (69%) 39 (31%) 127 (18%) 6.43**
2.5 to 5 98 (64%) 56 (36%) 154 (22%)
>5 to 7.5 76 (54%) 66 (46%) 142 (20%)
>7.5 to 10 44 (47%) 50 (53%) 94 (13%)
>10 81 (45%) 101 (55%) 182 (26%)
Table 7.
Total 387 312 699
Availability of
emergency funds for Notes: Where ***; **refers to significance level at 1% and 5%, respectively. This table shows the
a rainy day availability of emergency funds and their statistical difference across gender, age, education and income

Table 8 indicates that the majority of respondents having different sources of income can
sustain up to six months for their essential needs. However, inferential statistics in Table 9
reveals that respondents have shown an increase in their agreeability toward the affordance
of daily expenses in the continued crisis situation. In contrast, respondents are not sure
about the non-affordance of financial costs if the situation continues for more than six
months. The results are statistically significant across all income groups at a 1%
significance level. There is a feeling of uncertainty among the individuals relating to their
finances which may adversely impact their overall well-being.
Apart from savings, existing investments have also seen a paramount shift in their
value. Table 10 illustrates that most respondents have reported a decrease in the amount of
their investment across all income groups and the proportion is higher in high-income
groups than the lower ones. Further, a substantial portion of participants has also reported
that they are not aware of the value of their investments. The proportion has been observed
an upward trend as one moves toward higher income groups. On the contrary, primarily, the
respondents belonging to lower-income groups have reported that they do not have any
investments. Very few of them have stated the increase in the value of investment across all
income groups. Having a robust strategy to manage one’s wealth not only with the objective
to secure the capital but also to generate desired returns is the need of the hour. Similar to
crises seen earlier, the human race and markets will emerge strongly from COVID-19 too.
Diversification and regular assessment of investment portfolio is the mantra to tide the
tough times.
Moving ahead in the discussion, participants have been asked to state whether they have
diversified investments or not. The statement has been presented across education levels. It
has been revealed that 32% (n = 225) of the respondents have diversified investments in
Major At least a week At least one At least three
Financial
source of but not one month but not months but not Six months or distress and
income Less than a Week month three months six months more Total COVID-19
Salary 15 23 69 118 109 334
(4%) (7%) (21%) (35%) (33%)
Business 4 21 51 62 63 201
(2%) (10%) (25%) (31%) (31%) 517
Govt. 1 5 2 4 5 17
benefits (6%) (29%) (12%) (24%) (29%)
Pension 0 5 3 3 10 21
(0%) (24%) (14%) (14%) (48%)
Transfer 6 12 19 39 33 109
(6%) (11%) (17%) (36%) (30%)
Rental 1 0 2 4 3 10
(10%) (0%) (20%) (40%) (30%)
Others 2 1 2 1 1 7
(29%) (14%) (29%) (14%) (14%)
Total 29 67 148 231 224 699
Table 8.
Notes: This table shows the number and percentages of respondents with respect to the weeks/months Ability to pay
they can pay essential expenses for according to their major source of income essential expenses

Variable Parameters Stats Ability to pay essentials Non affordance Affordance

Income (INR lakhs) <2.5 Mean 3.23 2.69 3.08

2.5 to 5 3.18 3.10 3.54
>5 to 7.5 2.78 3.32 3.99
>7.5 to 10 2.76 3.33 3.94
>10 2.41 3.61 4.28 Table 9.
Levene’s stats F Stats 0.375 0.17 0.07
Effect on paying
One Way ANOVA 15.924*** 20.141*** 29.114***
ability and
Note: Where ***represents 1% significance level, this table shows the ability to pay for essentials and their affordance due to
affordance level across income COVID 19

Significant Somewhat Somewhat Significant No

Variable Parameters increase increase decrease decrease Do not know investment Total

Income <2.5 5 (4%) 8 (6%) 20 (16%) 23 (16%) 29 (16%) 42 (33%) 127

2.5 to 5 4 (3%) 9 (6%) 44 (29%) 27 (29%) 39 (29%) 31 (20%) 154
>5 to 7.5 4 (3%) 8 (6% 48 (34%) 36 (34%) 30 (34%) 16 (11%) 142
>7.5 to 10 4 (4%) 9 (10%) 38 (40%) 21 (40%) 16 (40%) 6 (6%) 94
>10 1 (1%) 23 (13%) 59 (32%) 35 (32%) 49 (32%) 15 (8%) 182
Total 18 57 209 142 163 110
Table 10.
699
Effect of COVID 19
Note: This table shows the number and percentages of respondents with respect to the changes in the on the value of an
investments across various income groups investment
QRFM various assets; however, 26% (n = 184) have reported no diversification in their investments
13,4 (Table 11). In total, 25% of participants (n = 177) do not know about diversification and 16%
(n = 113) do not have investments. The proportion of participants having no investments is
skewed toward a lower level of education.
4.3.3 Borrowing and ability to repay the loan. The next section of the survey deals with
the borrowings and the ability to pay the loan in the pandemic. Table 12 reveals that more
518 than 50% (n = 395) of respondents have outstanding loans and the proportion of individuals
having a mortgage is higher for high-income groups. On the contrary, the percentage of
respondents with low incomes has no outstanding loans compared to more top income
groups.
They are moving ahead with the ability to pay outstanding loans, which has been
described in Figure 3. It is observed that most of the respondents are neutral toward
stating their ability or inability to fund loans. However, approximately 40% (n = 280)
of respondents have shown disagreement about their ability to pay mortgages and
only 15% (n = 105) of them are affirmative in paying off their debts during this
pandemic. Further, 29% (n = 203) of the respondents have agreed that they will not be
able to pay off debts and close to 30% (n = 210) have denied that they will not be able
to do the same. Banks and housing finance companies (HFCs) are treading cautiously
in disbursing loans and even canceling previously sanctioned or pre-approved loans
for customers who have become economically stressed after the COVID-19 crisis. One
should not forget that the loan amount needs to be repaid along with interest
generated. If an individual has apprehensions surrounding future income, then it is
best to avoid adding another worry to one’s head. Table 13 reveals a significant

I do not have
Variable Parameters No Yes Do not Know investments Total

Education School 14 (16%) 17 (19%) 32 (36%) 25 (28%) 88

Graduate 68 (26%) 67 (26%) 74 (28%) 51 (20%) 260
Post graduate 89 (29%) 123 (40%) 63 (21%) 31 (10%) 306
Doctorate 13 (29%) 18 (40%) 8 (18%) 6 (13%) 45
Total 184 225 177 113 699
Table 11.
Diversification in Note: This table shows the number and percentages of respondents with respect to the diversification of
investment investments across various education levels

Variable Parameters No Yes Total

Income <2.5 65 (51%) 62 (49%) 127

2.5 to 5 73 (47%) 81 (53%) 154
>5 to 7.5 57 (40%) 85 (60%) 142
>7.5 to 10 43 (46%) 51 (54%) 94
>10 66 (36%) 116 (64%) 182
Total 304 395 699
Table 12. Note: This table shows the number and percentages of respondents with respect to the loans outstanding
Outstanding loan across various income levels
 Financial
distress and
COVID-19

519

Figure 3.
Ability vs inability to
pay loans

Variable Parameters Inability to make debt payments Ability to make debt payments

Income <2.5 Mean 3.28 2.55

(INR lakhs) 2.5 to 5 3.22 2.60
>5 to 7.5 3.05 2.76
>7.5 to 10 2.74 2.63
>10 2.60 2.73
Levene’s stats 0.9 0.09
One Way ANOVA 11.924*** 1.14

Notes: Where *** refers to significance level at 1%. This table shows the mean level of agreement or Table 13.
disagreement toward the ability to make debt payments across various income groups Debt payments

difference across the different income groups regarding the inability to make debt
payments during the pandemic.
4.3.4 Insurance and retirement planning. Further, the next section deals with the
insurance and retirement planning of individuals. Table 14 depicts that 42% (n = 297) and
44% (n = 305) of individuals have life and health insurance, respectively. Interestingly, 35%

Type of insurance Frequency (%)

Life insurance 297 42

Health insurance 305 44
Unemployment insurance 10 1
Accident/disability insurance 106 15
Do not have any insurance 248 35
Other 4 1

Notes: This table shows the frequency and percentages of respondents having various types of insurance Table 14.
cover. The respondents could choose more than one option Type of insurance
QRFM (n = 248) of respondents do not have any insurance. The COVID-19 has augmented the
13,4 importance of insurance in the financial resilience of individuals and families. It has a
pivotal role in ensuring that people and their families can pacify unexpected economic
shocks. Retirement planning should be an essential part of personal finances.
Further, the research reveals that most of the respondents have still not started planning
for retirement. Table 15 indicates the distribution of demographics of respondents
520 concerning retirement planning. The proportion of men (n = 109) (23%) is higher toward the
commencement of their retirement planning than women (n = 37) (17%). Further, retirement
planning increases as the respondents’ age group and education level and income increase.
However, the proportion of married individuals is higher in terms of retirement planning
than in single individuals. The percentage of respondents who take their financial decisions
in consultation with someone is more elevated in retirement planning than in self-decision-
makers.
Interestingly, the research reveals that 59% (n = 413) of individuals had not started
preparing for their retirement before the pandemic struck (Table 16). Further, 22% (n = 155)
have set aside money in their savings accounts for retirement. In total, 15% (n = 102) have to
route their savings through the Employee contribution fund (EPF) and very few have other
options for retirement planning such as Individual Retirement Account, certificate of
deposits, mutual funds, stocks, bonds and real estate. Table 17 shows the effect of COVID-19
on retirement savings. In total, 41% of respondents have stated the reason for reduced

No Yes
Variables Parameters N P(%) N P(%) Total

Gender Female 187 83 37 17 224

Male 364 77 109 23 473
Prefer not to say 2 100 0 2
Age 25–35 369 87 53 13 422
36–45 72 71 30 29 102
46–55 56 64 32 36 88
56–65 47 67 23 33 70
66 and above 9 53 8 47 17
Education School 83 94 5 6 88
Graduate 217 83 43 17 260
Post graduate 228 75 78 25 306
Doctorate 25 56 20 44 45
Marital status Single 366 88 51 12 417
Married 182 66 92 34 274
Divorced 2 67 1 33 3
Widow 2 67 1 33 3
Prefer not to say 1 50 1 50 2
Income <2.5 119 94 8 6 127
2.5 to 5 136 88 18 12 154
>5 to 7.5 115 81 27 19 142
>7.5 to 10 66 70 28 30 94
>10 117 64 65 36 182
Financial decision-maker Self 402 83 82 17 484
Consultation 151 70 64 30 215
Table 15. Note: This table shows the frequency and percentages of respondents with respect to their retirement
Retirement planning planning across various demographics
Various choices Frequency (%)
Financial
distress and
None 413 59 COVID-19
Participate in my employer’s pension program (if applicable) 70 10
Set aside money in a savings account 155 22
Set up an individual retirement account (IRA) 32 5
Purchased certificate of deposits (CDs) 21 3
Invested in mutual fund(s) 92 13 521
Invested in stocks 58 8
Invested in bonds 21 3
Contribution in employees provident fund (EPF) 102 15
Invested in real estate 7 1
Other 1 0
Table 16.
Preparation for
Notes: This table shows the frequency and percentages of respondents with respect to their various retirement before the
choices of retirement planning. The respondents could choose more than one option pandemic

Parameters Frequency (%)

Reduced/deferred due to income loss/deduction 288 41

Withdrawal from retirement pot 43 6
Loss due to stock market volatility 60 9
Profit due to stock market volatility 7 2
No retirement savings 8 1
No impact 290 41
Others 3 0
Total 699 100
Table 17.
Effect of COVID-19
Notes: This table shows the frequency and percentages of respondents with respect to the effect on their on retirement
retirement savings during the pandemic savings

income, which has a significant impact on retirement savings. Further, 41% (n = 290) have
reported that there is no impact on retirement savings. The pandemic’s economic side effects
also have significant implications for when and how older adults plan their retirements. Not
only have older workers experienced some of the highest rates of job loss of any age band
but in previous recessions, it has also taken older unemployed workers a much longer time
to become re-employed than younger ones. That, plus the fact that a recovering stock
market has lifted retirement account balances, has no doubt prompted some to ponder early
retirement. Yet low-interest rates – while a boon to borrowers – are a headwind for people
nearing or in retirement

4.4 Most financially vulnerable population

The present research reveals the financial health status of Indian individuals during a
pandemic. It also shows significant groups who are financially vulnerable concerning the
pandemic. The income of individuals has come out as a significant criterion in the financial
vulnerability of individuals. Respondents belonging to lower-income strata and women are
more financially vulnerable as compared to others. Education has also played an essential
role in improving an individual’s financial situation. The research also reveals that
respondents having higher education have diversified investments, thereby making their
QRFM financial situation less risky. Undoubtedly, COVID-19 has impacted the finances of young,
13,4 as well as old, rich and poor and men and women. Those with the smallest amount of
earnings are the most hard-hit. Some older people are exposed to added vulnerabilities
during this time. At a fragile age, older people have a risk of losing income and pensions.

5. Discussion, implications and conclusion

522 This work is an early attempt to examine the economic impact of COVID-19 on individuals.
Using individual-level representative data, we exhibit how incomes, expenses, savings,
investments, debts and retirement safety nets of the individuals have been disrupted. We
show the different ways in which the individuals have responded to a distinct economic
contingency of COVID-19. This study sheds light on individuals’ financial preparedness to
deal with economic jerks and identifies those who are most vulnerable during such turbulent
times. Table 18 shows a summary of the results of the study and their practical implications.
Our findings reveal that Indians have been significantly affected by pandemic on various
dimensions of finance. The income of individuals has been reduced and expenses have risen.
Individuals have shown financial concern amidst the pandemic which may impact their
financial well-being. They are cutting down expenses and looking for an additional income
source. Further, investments are not diversified thereby leading to a comparatively riskier
situation. More emphasis has been given to meeting our regular needs. Most individuals
have no insurance type and are devoid of retirement planning in a systematic manner.
The way one plans finances during the pandemic and the aftermath is fundamental in
meeting both short-term and long-term family financial goals. On one hand, people need to
consider all their income flows such as wages or salaries, rental income and retirement
income. On the other hand, they need to account for monthly expenses such as groceries,
school fees, rent, electricity, transportation cost, mortgage payment and medical expenses.
An emergency fund is a prerequisite to meet short-term financial goals. Stock market
investments require adequate knowledge about the exploitation and management of market
volatility. Not only this, adequate insurance coverage of health and life is but also necessary
for each individual. Besides this, retirement planning is another arena where the smart
decision-making of individuals comes into play. The current crisis teaches some of the
biggest financial lessons. This pandemic has taught the value of emergency funds and has
shown that there is a need to understand goals before investing. Equities are meant for long-
term goals, while debt funds and bank deposits meet short-term financial objectives. The
COVID-19 has also taught the importance of buying adequate health, life and
unemployment insurance to meet the family’s unexpected expenses. As the jobs are already
at risk, it is preferable not to rely on employer-provided health insurance plans. It is
advisable to get personal health coverage for the entire family. People often occupy their
comfort zones when things are normal, but tough times like these remind us of the vitality of
owning an alternate source of income. On the borrowing side, well-managed loans can
facilitate the fulfillment of life goals such as buying a house or a car. Credits could also pull
us out of a financial emergency. However, it is essential to evaluate the capacity to repay
before opting for any loan as an unaffordable loan could cause psychological stress and
disrupt the finances. With so much uncertainty, repayment of an unaffordable loan could
put more pressure financially and mentally on the individuals despite temporary relief from
the government. While borrowing, one needs to have a clear picture of the type of loan,
interest rates and subsidies. It is essential to invest time now before making a personal
decision about borrowing. As there is a decrease in the value of assets in retirement accounts
due to falling markets and lower capacity of individuals to contribute to retirement savings
plans, policymakers should communicate to the participants the necessity of staying the
 Financial
Research questions Results Implications
distress and
RQ 1 What is the Negative One of the most pressing economic COVID-19
impact of COVID-19 challenges the individuals could face post-
on the personal Covid-19 is increasing income inequality. In
finances of an environment like this, one needs to go
individuals? back to basics and make sure that we have
Income Decrease in income a sound financial plan in place. Given these 523
Expenditure Increase in expenses findings and the difficulty in managing
Financial challenges Struggle to meet daily expenses finances during a pandemic, providing
along with children’s school fees financial advice could offer some help
and loan payments
Financial concern Increase in financial stress relating
to the management of finances and
coping up with the financial
crunch
Financial well-being Overall decline in financial well-
being
Value of investments Decrease in the number of
investments, with many
individuals being either unaware
of the value of their investments or
not having any investments
Retirement savings Decline in retirement savings due
to reduced income
RQ 2 What is the Weak financial resilience and Stick with the basics – have an emergency
level of financial financial health fund in place, spend only on what is
resilience and financial absolutely needed, ensure that one has
health status in the insurance to protect their family from any
face of economic unexpected event and finally, keep
uncertainty caused by investing regularly to build long-term
pandemic? savings. Financial literacy is required now
Emergency savings Half of the individuals have more than ever. Digital financial literacy is
emergency savings also important
Debt situation Half of the individuals have
outstanding loans, particularly
higher for higher-income groups
Portfolio Not many have diversified their
diversification portfolios
Insurance Many do not have insurance
Retirement planning Individuals have still not started
planning for retirement. Such
planning increases as the
respondents’ age group and
education level and income
increase and is higher among
married than single
Ability to meet Individuals are not sure about their
everyday expenses ability to sustain financially for the
next 6 months’ expenses
Social support Free financing from friends and Table 18.
family Summary table of
Government support No substantial benefits from the results mapped with
government RQs and the
(continued) implications
QRFM
Research questions Results Implications
13,4
RQ 3 Who is the most Lower-income strata, women, A large portion of the population is
vulnerable during a businessmen, not much educated financially illiterate, maybe overconfident,
sudden economic and older people has invested highly in illiquid assets (e.g.
downturn? houses) financed by debt or simply lack the
financial resources to create a buffer. It
524 calls for rapid and decisive action by
governments to support the most
vulnerable people highlighting the
importance of a broad and coordinated
policy response that includes strengthened
financial protection, education, health-care,
housing support and specific interventions
to enhance personal financial security, as
well as actions supporting their financial
Table 18. education initiatives

course keeping the long-term view. Withdrawal from retirement accounts should be a last
resort.
The crisis has uncovered the financial fragility of individuals. Financial literacy is the
backbone of positive economical behavior and subsequently, robust financial planning
(Agarwal et al., 2015; Goyal and Kumar, 2021). After the global financial crisis of 2008,
COVID-19 is yet another situation of chaos and distress which concerns the attention of
policymakers, financial educators and counselors regarding lack of knowledge related to
basic economic concepts among individuals. Such deficiencies can adversely impact
individuals’ money management skills (OECD, 2005).
We do not know what the next 5–10 years will be like. People need to align their financial
strategies with the transforming reality. People must take care of their money and for that,
timely action is needed. A holistic financial education plan is pivotal for recovery and
preparation for the next crisis. To support short-term financial resilience, financial education
interventions must be focused on managing everyday finances, the meeting ends with a
lower income and dealing with existing and new debts. Financial education should be a part
of the school and college curriculum. Advice and counseling services may prove beneficial to
the financial literacy of vulnerable groups such as low-income, women, the elderly and not
much educated. As most people are working online and learning through digital means,
online financial education resources can be used. At the organizational level, financial
wellness programs can be developed to improve the employees’ financial security and well-
being at the workplace.
The COVID-19 pandemic has cluttered the global economies, whether developed or
developing. We aimed to understand the nationwide effects at the individual level in India.
However, the results should be generalized cautiously because of the limited sample size and
have been drawn from the people in the formal sector and mostly from the urban cities. People
are quite hesitant to share their financial information which makes it challenging to collect
data. Also, including the informal sector in the survey was difficult due to their inaccessibility,
especially during the tough times as such. Additionally, we have tried to capture investments’
information through a diversification question only. Future studies could include a more
detailed survey on investment activities. In spite of the limitations, the study is early evidence
of the state of personal finances in light of COVID-19. Nevertheless, we have attempted to
address concerns about the considerable gaps in knowledge and the absence of clear evidence Financial
to support interventions. The future awaits a wide array of research examining the pandemic’s distress and
impact through cross-country studies and its overall impact on the financial system. Several
COVID-19
questions still need to be addressed on how the individuals discovered various alternate
sources of income, arousal of financial conflicts within the families and the financial difficulties
faced by the individuals and their families directly hit by the virus.
525
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Corresponding author
Satish Kumar can be contacted at: scholar.satish@gmail.com

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