5 Money Lessons from COVID-19 and How to Apply Them in 2022 and Beyond
There’s no doubt that the unprecedented situation of the COVID-19 crisis hit your wallet hard.
But, on the bright side, the pandemic has taught us 5 important money lessons that can help you better your personal finances and relationship with money going forward.
1. Emergencies Do Happen
The COVID-19 pandemic came us a surprise to everyone across the world, and no one knew how long it would last.
If there’s one major lesson the pandemic has taught us, it is the importance of maintaining an emergency fund.
Having an emergency fund is one of the best ways to manage your personal finances.
It’s also a safety net that would gaurantee that you continue paying your bills even after your paycheck stops arriving.
While it is recommended that you should build up to three months’ worth of your living costs, Suze Orman suggests that the emergency fund should cover at least eight months of your expenses/bills.
2. Embrace A Debt-Free Lifestyle
There’s a good chance that you’re in debt and perhaps struggling to pay off a car loan and mortgage at the same time.
But you might also be looking for ways to make a plan to pay off your debt.
For many people, minimizing the debt load might haven’t been an issue until the global pandemic of 2020 struck.
High-interest debts such as credit cards and short-term loans can leave you completely dry financially.
Because the interest rate is an important part of a debt, it’s important to understand what interest your debt costs. And focus on paying off as soon as possible.
3. Save As Much as You Can
If there’s another important lesson that came out of the pandemic, it’s the importance of saving.
The most impacted by the COVID-19 pandemic were those without savings or with little savings to fall back on.
Savings will allow you to meet several months of essential expenses for your household, but especially during any future crisis.
You can calculate your savings goal amount that’s needed to make your money go further at any time.
But if your monthly savings is a negative number because money is pretty constantly tight at the moment. You can start to gradually save and manage finances smartly with a money saving app, such as Digit that will let the little you have leftover go to savings as we move forward in the post-pandemic era.
4. Embrace Frugality
It all comes down to the realization that spending money on potentially luxury expenses or lifestyle items prevents you from developing health spending habits.
If anything, the pandemic has taught us that we can adopt a frugal lifestyle by limiting unnecessary expenses.
For example, during the lockdown, families came up with creative ideas to celebrate quarantine birthdays while being indoors.
A major takeaway is that you don’t have to spend a lot of money to have a good time as we continue moving forward into relative normalcy.
Instead, living a simple life by cutting unnecessary expenses will go a long way in helping you develop healthy spending habits from now on.
5. Consider Spreading Your Investment Out
A final takeaway from the COVID-19 is the importance of diversifying our investments.
If there’s one important takeaway from this lesson, let it be this: make sure to well expand your investment classes by investing in real estate or other investments types, such as mutual funds.
This way, you can reduce the likelihood of one economic event harming your investments equally.
According to experts, you can consider hiring a financial professional who understands your investment goals, personal situation, risk tolerance, and can help you plan accordingly.
Final Thoughts
In a nutshell, the global pandemic was a black swan event whose financial consequences weren’t anticipated.
As we move ahead, it’s of utmost importance that you understand financial wisdom and discipline are required to weather any future financial storms.
If you can put into practice the 5 lessons from the COVID-19 crisis, you’ll be financially ready in case of the unthinkable strikes again in the future.
