It might seem like a stretch when you start to talk about personal finance lessons in the middle of this pandemic. The pandemic has pushed personal finance to the limit. It has made you think long and hard about your finances. Your debt obligations and expenses suddenly become unbearable crushing down on whatever income you have coming in.
The health crisis ripples out to more than just the healthcare industry. Yes, it is under an enormous amount of stress. Hospitals and emergency rooms are seeing full capacity and ventilators are being sourced from almost everywhere to help patients. There is no denying that the COVID-19 is a health and medical issue but its sheer complexity has already affected our economy as well.
But like most experiences in life, there are personal finance lessons you can pick out from the current situation. You just need to keep an open about the situation around you. It also helps if you keep an upbeat outlook on things. This will also help you manage your mental health throughout this process. As for the financial lessons, here are some of them you might be able to pick out.
The pandemic created spending barriers
One of the personal finance lessons you can get take away from the pandemic is that spending barriers become automatic. This is true especially when you have to make do with limited funds. The health crisis has forced a lot of businesses to close down and your place of work could be one of them. This would put you in a difficult financial situation.
Once your income is affected, you will begin to cut down on your expenses. If you do not pay attention to it at first, you will begin to feel the drain on your finances. It will slowly drain whatever savings you have set aside in the past. This is because your income is not coming in as you have projected and you are burning through your savings.
This would force you to quickly identify and focus on your spending priorities. Spending barriers will spring up to separate unnecessary spending from those that you really need. This is an advantage since it helps you monitor your spending more effectively. The more you save money from spending too much, the longer it can sustain you during this crisis.
More savvy online shopping
Who would have thought that this pandemic would teach people to be more savvy online shoppers? This is one of the personal finance lessons that is coming out of this health crisis.CNBC shares that a lot of people are shopping online to replace old-fashioned trips to the store. More than the convenience it brings, shopping for your needs online is a lot safer.
More than the convenience, you drastically lower the chances of getting infected with the virus when you shop online. Of course, you need to remember to disinfect also what items you buy online before bringing it inside your home. That being said, people are now re-discovering the art of buying what they need online.
It is also important to take note that there are also risks of shopping online. Hackers are always on the hunt for ways to steal your information. They will be a lot more active now considering a lot more people are shopping online. Make sure that you still keep your data secure. Just like making sure you only log into secure sites and do not save credit card information in your devices.
Highlighted the importance of an emergency fund
One of the personal finance lessons this pandemic has brought into the limelight is making sure you have an emergency fund. As the pandemic forced a lot of businesses to a halt, you might see your income dwindle down. Forbes even shares that more than 36 million Americans have filed for unemployment. When this happens, you start to rely on whatever savings you have and this includes your rainy day fund.
It is quite challenging to try and save for your emergency fund in a short amount of time. It normally takes quite some time to have a reliable amount stashed away for rainy days. The idea with this is that you put aside a small amount on a regular basis. Over time, you get to save what you need to help you get through difficult times.
Ths pandemic has exposed the importance of having some form of an emergency fund. It can be money in your drawer, cash you have deposited in a regular savings account, or even some funds in a high-yield savings account. The important thing is that you have some funds to help augment your finances as you go through this crisis.
More cautious credit use
There will be an increase in your credit card use when you are running on a tight budget. This is common simply because you might not have enough funds to pay for all your expenses. There are also times when you have the money but prefer to hold on to your cash. Paying with your credit cards also helps you spread out the payments over a period of time.
When you pay with your credit cards, you get to keep your cash for extreme emergencies. You also get to spread out your payments because you can pay only the minimum on your statement. This is normally a small percentage of your total charged amount. Just remember that when you choose to pay just the minimum, your lender can start adding fees and other charges on your payments.
This can lead to paying more interest and other fees over the course of time. The rule of thumb is to pay everything off at the end of the month. When you that is not possible, you can pay the minimum but make sure to increase that payment over time. This helps you pay off your debt a lot faster and start saving money.
You saw the importance of work or regular income
One of the biggest personal finance lessons this pandemic has brought to people’s attention is the importance of having a regular source of income. This gives your finances a certain sense of stability especially during this time. A lot of employees where let go during this trying times simply because business is down.
It is important to have a steady source of income. For one thing, your bills will come in every month whether you have a job or not. You need to spend on basic needs just to survive and that would be difficult without a job. Yes there is unemployment insurance but that would not be enough for the things you need in life.
This pandemic has made people realize that their work is important. Yes, dreams are important and there can be a chance that you are not in your preferred industry at the moment. You can always leave and pursue what you want. But you need to make sure that you have a job to land on before you jump ship. Especially now that times are tough, it would be difficult to shift to a different job at the moment
The health crisis has given people a lot of personal finance lessons to look into and learn from to help improve money management. It might be tough to discern these lessons in the middle of a health crisis. Especially with a lot of people getting infected, hospitals at full capacity, and people sheltering in place. But it is important to try and make financial improvements during this time and these lessons can point you in the right direction.