5 money lessons we can learn from COVID-19
Some events have the potential to define a generation. Here are some of the lessons — financial and otherwise — that we might carry forward from the COVID-19 global pandemic.
The COVID-19 pandemic has imparted many lessons. It may have taught some of us to tolerate boredom. It may have taught some of us to be more industrious and DIY. Perhaps we learned to be more grateful for the things we have. But almost universally, it’s taught us a thing or two about money. If you are fortunate enough to be working and receiving a regular paycheque right now, there’s a good chance you’re spending it differently.
This can be a good time to reflect on some of the lessons we have learned during the pandemic. Looking back through history, frugality and ingenuity came to define some generations during key economic moments, such as World Wars or the Great Depression. People learned to grow their own food, ration supplies and save spare change in jars for the little extras that they wanted. Perhaps the COVID-19 pandemic will be generation-defining as well. Here are five financial lessons that we may be take from this unprecedented experience:
1. Have a plan for emergencies
Maybe you had an emergency fund going into this, or maybe not, but this is a great opportunity to consider the proverbial “rainy day” that people always talk about. One thing this pandemic has imparted is that emergencies can happen at any time. Many experts recommend having three to six months’ worth of living expenses set aside. Building that kind of emergency fund takes real discipline, since we are more likely to think about any financial problems we are having now, and discount the importance of saving up for a later time. But even knowing where you may turn in a pinch, such as a line of credit, could help you sleep more peacefully at night.
2. Enjoy the benefits of living simply
Even if you have money to spend these days, your choices of where to spend it could be limited. Many of us are cooking at home more often than we were before, repairing things that are broken instead of replacing them, and some of us have even learned to cut our own hair. If you have undertaken any of those activities with your loved ones, perhaps you’ve had an opportunity to learn together and enjoy the time. When we live simply, we gain time, space, money, energy and attention — precious resources that we can redirect toward the things that matter to us. You may even with to talk to your loved ones about how accomplished, healthy or connected you feel right now while life is a little less busy.
3. Decipher between needs and wants
If you have faced cash shortfalls during this time, or have felt concerned for your future financial outlook, you may have asked yourself when making a purchasing decision, “Do I really need this?” This can be a good exercise, pandemic or not. Our needs may be characterized as food, shelter, heating and transportation. Wants are more discretionary, like expensive clothing, entertainment or ordering take-out. Of course, we may not wish to ignore all of our wants — we want to enjoy life, too — but discretionary spending should be based on what we can afford after our needs and savings are taken care of.
4. Accept help if you need it
Many of us have had to ask for help financially during this time. The Canadian government has announced a number of measures to help Canadians pay their bills, with benefits geared toward people who have lost their jobs, had their hours reduced, or businesses that are facing closures and reduced revenues. And while those benefits have helped many Canadians, there are still others who have had to ask for help from friends or family. Finding the courage to ask for assistance when needed can be a lesson that goes far beyond money. With a solid plan that specifies your needs and a repayment schedule, asking for help during a time of need may be a better choice than building up up high-interest debt.
5. Help others when you can
If you have been lucky to maintain a steady income during this time, you may find yourself saving money thanks to reduced expenses. You might think about ways you can use some of those savings to help others who are in dire need right now. Charities with increased need right now include health care programs and hospitals, food banks, and services for seniors. Even if you don’t have any extra money kicking around, just helping vulnerable neighbors by going out and running errands for them, sewing masks, or donating blood can impart a lesson of generosity, particularly when you get others involved too.