In just two short months the world that we all knew has changed. It is likely to stay changed in many ways for many years to come. As with anything that has a dramatic impact, we try to look at ways we may grow or learn from the upset. When it comes to personal finances, investing, retirement, and our overall attitudes toward money, I wonder what impact this pandemic will have on couples, families, and individuals.
Whether you have a lot or a little, no one was left untouched by this virus and the economic toll that it has taken. This time in our history will leave an indelible mark on our emotions and the way we think about and interact with money. If you’ve just retired, you may have seen a significant drop in your retirement investments that you are counting on to last you several decades. If you’ve just graduated from college and you were on the hunt for your first career job, you may instead find yourself back at home with mom and dad. If you’re an actor or musician your prospects for the moment are nil. If you are fortunate to have a job that is stable and you are working from home you may be fully aware that the raise you were about to ask for is not likely going to happen this year.
So, what does this mean for the role of personal finance in our lives? For each of us, it may be a bit different, but I have identified five areas of finance that may be viewed through a different lens in the aftermath of Covid-19.
Saving
All too often, we think of our emergency savings as a safety net for the potential “rainy day” way off in the future. Things begin to look a bit different when we find ourselves living in a global financial emergency. Whether you’ve had to dip into your savings during the pandemic or not, you’re likely thinking more about the importance of an emergency fund that could sustain you through any unforeseen events that may befall you in the future. If you’ve been following the traditional advice of maintaining three to six months of living expenses in savings, now might be the time to consider growing your savings to accommodate your needs for a longer time period.
Spending
In uncertain economic times, we should all be more aware of how we’re spending our money. Whether you’re a spend-thrift or conservative by nature, the current pandemic is probably informing your spending choices in new ways. While there are some things you can’t control – like the price of eggs tripling – there are other things that are always within your control, now and into the future. This includes supporting local businesses over chains, for example, or any other spending choices that reflect your values. In the aftermath of COVID-19, we can all benefit from ensuring our spending habits are more in line with our money values.
Investing
With the stock market in bear territory and volatility and uncertainty the new normal, we’ve all been reminded that investing is about playing the long game. While it’s still good advice to stay the course and refrain from selling investments that may be performing poorly at the moment, there’s no reason not to think about additional stock purchases. If your post-pandemic plan is to diversify your portfolio and your emergency fund is already solid, start thinking now about taking advantage of good deals on solid companies and diversifying your investment portfolio.
Retirement
Market volatility has eroded many Americans’ retirement accounts, and it may have changed your timeline for retirement or left you feeling deflated about financial losses after years of hard work. For those further away from retirement, present needs may overtake your desire to continue funding your retirement accounts. Regardless of where you fall on this continuum, this is a great time to continue contributing to your 401(k) and IRA accounts if you’re able to because the dollars you invest now can help you get discounted stocks that will grow exponentially as the market recovers.
Your Money Story
If you’ve never really taken the time to understand your own money story – the history of financial decisions and influences in your life, and your emotions surrounding them – now is the time. Living through any type of unprecedented event, especially one posing threats to both health and finances, will force you to take stock of what your money means to you. Doing so will help you zero in on your priorities and goals, allowing you to better plan for a meaningful future for you and your family.
No matter the circumstance, this crisis has revealed how dependent we all are on each other and the world around us. None of us is a silo. And I think that is a good thing. Perhaps this shared experience will make us all a bit more grateful for things we may have taken for granted in the past. Like the luxury of getting a pedicure or the pleasure of hosting a dinner party or the comfort of hugging your best friend. Someday, hopefully soon, we will be able to get back to doing those things, and when we do try to remember to cherish the little things that you didn’t give much thought to before this all happened.
