5 Things Covid-19 Taught Us About Our Finances
As we all navigate our way through a global pandemic we have been forced to develop new habits and learn new ways to exist. Social distancing has not only forced us to slow down, but has also allowed us to explore new ways of doing things. From developing new skills to honing our natural talents, we can all agree that Covid-19 has had its positive points - and with finances its no different… Check out the five ways that this global pandemic has helped us get our money right.
We Need An Emergency Fund
One of the major things we all realized as a result of Covid-19 is that anything can happen. When we are used to the status quo - going to work everyday and receiving our income - we can fall into the trap of thinking that our routine is guaranteed. This pandemic has taught us otherwise. Our income is not guaranteed… and Covid-19 has been a huge social wake up call. The truth is, our income can be effected at any time by a number of different things so having three to six months worth of living expenses saved is always a good idea. The alternative to an emergency fund is, well, credit cards and who wants to lose their income and rack up debt at the same time? Not the best plan.
2. Cooking At Home Is A Lot Less Expensive (and can be fun too)!
Before Covid-19, like many others, I spent a lot of money per month on dining out. As social distancing became mandatory many of my favourite restaurants either closed down or modified their hours. Heading to the grocery store became a more frequent occurrence and before you knew it… I was experimenting with cooking, spending more time in the kitchen with the kids, saving money and eating more nutritiously. On average, a home cooked meal saves $16 per serving when compared to dining out - meaning that dinner for a family of four could have savings of up to $64 if cooked at home. Considering that groceries and restaurants are the categories that most individuals overspend - we can safely say that being forced to social-distance has definitely had its benefits.
3. Maybe We Don’t Need All That Stuff After All
Nails, lashes, facials, waxing, random trips to the mall to buy clothes we absolutely do not need - all of that was forced to a screeching halt when non-essential services shut their doors in an effort to minimize the spread of Covid-19. What did that mean for our purses? We got to actually see what we truly spend on non-essential nice-to-haves. Now I’m not suggesting that we cut the things that actually bring us a little piece of sunshine, but it is worth an evaluation to see if our savings could be better allocated to reaching our financial goals a bit faster.
4. How Not To Panic During a Market Downturn
Seeing your investments drastically plummet in a matter of days is not for the faint of heart. Covid-19 swiftly altered every sector, and negatively impacted all production across the globe. The result was a huge decline in, literally, every market. As I received numerous calls from clients and investors wanting to pull their investments I had to constantly give the reminder that we have seen this happen before, and the market usually corrects itself. Going through market ups and downs develops resilience and a stronger ability to withstand the anxiety that usually accompanies the thought that you can be losing money. The key to staying calm? Remain focused on why you started investing in the first place… What was your initial financial goal? Was it to purchase that property? your child’s education? Retirement? Whatever the goal, your risk tolerance should have determined the correct investment mix to achieve it. So why panic when things go wrong in the short term?… It’s only a temporary setback.
5. Spending Time With Loved Ones Doesn’t Have To Cost Money
From virtual celebrations on Zoom to drive-by birthday parties, Covid-19 has been a season filled with creative ways to stay connected. One thing is for sure, we have proven that even though we have to keep our distance we are connecting in so many more ways than before… and the benefits to these new hang out options have left us with more cash in our wallets. A simple phone call or video chat was not the norm for a baby shower, but on the up side you get to say a simple congrats and skip the present purchasing (not to mention all the costs that go into hosting an event like this). No concert tickets, no BYOB, no buying a new outfit to look your best - with all that savings, cancellations may not be a bad thing after all. But the main lesson learned is that love and support has nothing to do with distance… or spending.
