There are a number of financial lessons from the pandemic you can use to help you stay on top of your game this year. It might seem to be the least important takeaways from the grueling effects of the health crisis. But if you look over and belittle the lessons that hard times bring, you run the risk of encountering similar mistakes in the future.
There is no denying the fact that the health crisis brought by the novel coronavirus crippled economies all over the world. Some parts of the world got it worse but everyone felt the effects of the health crisis. Hospitals were being filled up and people staying at home to minimize exposure. Once people started to stay home, businesses started to get affected. Fortune shared that almost 100,000 businesses went under in 2020 due to the pandemic.
No one was going out and buying from businesses. As a result, some had to slow down operations while others were forced to close shop. When this happened, a lot of working Americans lost their jobs or took home a smaller pay at the end of the month. The health crisis rippled out to several areas in your life making life a lot more challenging.
Now that the economy is slowly improving, financial lessons from the pandemic should help guide you to improve your finances. It was a challenging time and there are lessons to learn from that experience. You do need to keep your eyes and mind open to see and realize where these lessons are. Some may not be as obvious as you think.
It helps to look at how you managed to overcome your own set of challenges from the past few months. There are a lot of lessons there you can learn from. More than that, it helps to read on to see how other people struggled but more importantly, how they persevered and were able to overcome their struggles during the health crisis. Here are a few lessons you can look at and see how you can positively incorporate them into your financial management.
Arguably one of the biggest financial lessons from the pandemic that people went through is the need to save money. Those that were doing it prior to the health crisis coming along found their finances in a better position than those who did not save any money at all. When companies started closing down, a lot of people affected by it started to dip into their savings.
The health crisis was one big wake-up call for people who did not believe in setting money aside for emergency situations. It is possible that they believed they did not need one since their work was stable enough. Some people were able to put up a business and did not bother to save for rainy days. The health crisis was able to prove just how important a cushion fund is.
This is why saving money you can use for future emergencies is one of the most important lessons you will learn from the health crisis. This needs to be high up on your priority list when you start managing your finances. It is important that you have some backup funds in case of another crisis in the near future that could impact your finances.
Another one of the financial lessons from the pandemic you have to keep in mind is saving smart. Yes, you need to save money but you have to be smart on how you do it. You do not just save every single dollar you get your hands on hoping to ride out the crisis. You need to make sure that you save money the right way.
One of the factors you need to consider is inflation. This is a balance between access and growth. Yes, you need to be able to access your emergency fund quickly but does it mean you keep the whole fund in a safe at home? On the other hand, you want the money to grow but investing it where you cannot touch the money for a few years defeats the purpose of quick access.
This is why you need to balance your approach. You can definitely keep some of it at home for those situations you would need cash. You can also consider high-yield savings account to help you keep the money growing the longer you don’t use it. This way, you get some growth on the fund and not lose its value due to inflation.
Procrastination can be dangerous
We always think we have a lot of time on our hands. As a result, we put off doing things for another day. Or worse, we take our time and spend it on frivolous pursuits. Not knowing that time is a limited resource that we cannot take back. Once time has passed, no amount of money or effort can bring it back.
If you have waited to save for your emergency fund until you get promoted or when you get your tax return and then the health crisis suddenly hits, you have nothing to help you make ends meet. This is one of the financial lessons from the pandemic you need to take very seriously. Start saving now even if you begin with a small amount. The important thing is you start. Especially so that NBC news shares that about 46 million people wiped out their emergency savings since the pandemic started. Imagine not having the money for emergencies. Where will you get that money?
This holds true for other areas in your life as well. If you wait to get in touch with important people in your life because you are busy, you might not have the time to do that again if they suddenly succumb to the virus. The lesson here is to simply start now. Know and understand what is important in your life and work towards it as fast as you can.
Financial lessons from the pandemic include needs over wants
The ongoing health crisis forced a lot of people to take a serious approach when it comes to their finances and a big part of this discerning needs from wants. You need to make sure that you are able to differentiate between the two. Doing so will help you manage your money better because you spend only on what you need.
There are times where the lines between needs and wants blur out. Take food for example is one of the most basic needs of people but it is still easy to overspend on food wants. Sometimes, we do the grocery on an empty stomach that is why we buy way too much food. Clothing is a basic need but we could end up paying for expensive pieces when we give in to our wants. It is not enough that you know what you need. It will help if you put in a budget even for your needs. This way, you are able to lower the chances of overspending on them.
The new norm is virtual
The health crisis ushered in and allowed virtual communities and accelerated their integration into society. Online transactions have been around for a long time now but people did not really warm up to the idea quickly. It did not help also that there were some massive online breaches that exposed sensitive user data to hackers.
But the health crisis paved the way for people to truly be invested in the online world. From students getting their education through online channels since physical schools have not opened yet. For businesses that were able to pivot quickly, their employees shifted to working from home. On top of this, a lot of people have been heavily using online shopping and payment platforms for their daily needs.
It is safe to say that the online shift is here to stay for a long time. Though it does make financial management a lot easier, it also carries certain risks. Be sure that you take proactive steps to make sure that your online transactions are safe.
There are a number of financial lessons from the pandemic you can use to help you move forward and strengthen your finances for the year. You just have to choose the ones that will work in your specific situation.