Zoom into 2020, the pandemic and lockdown shook up the economy of our nation and impacted the personal financial planning methods as uncertainty loomed over income and jobs. It opened our eyes to the importance to be prepared for financial emergencies which can come unannounced.
We learnt lessons which taught us about the importance of planning, having an emergency fund, having an alternate source of income and teaching us that time never remains the same and that life and reality can hit you any time.
Let’s have a look at some of the critical financial lessons we learnt during the pandemic;
Be prepared for emergency: One thing that people learnt the hard way is that emergency can come any time and in any form. Saving and building on your emergency fund could bail you out of a dire situation, if not for too long but surely for some time till you find a way out. It can cushion you for short term economic disruptions. Also, keeping money where its accessible during emergency can save you the need of cutting down on your expenses or borrow money by paying high interest rates.
Invest when the others are scared: The perfect time to invest is when the markets are at a low triggered by fear that grips the investors and need of money which made them sell their shares. These reasons will not stay for a long term and buying when the markets are at a low has historically been an excellent entry point. In the time of fear and uncertainty, you have increased your chances of above average returns.
Have a life insurance: This pandemic in 2020 and the 2nd wave in 2021 has taught us that life is unpredictable. Today you are there and tomorrow you will not be but the people dependent on you will be in a mess if you have not planned well and got yourself a life insurance. If you are the main earning member of the family, get yourself covered and secure the future of your family. If you have a home loan, secure it too with an insurance, so in case of unforeseen event, your family doesn’t lose the house if they are not able to pay the money, as the insurance cover will pay for it.
Be financially discipline: Before the pandemic, we had to step out every weekend and splurge our money in the name of outing and fun time with family, but the pandemic taught us that we can enjoy the same and still have a financial discipline. Cooking at home and having fun times staying indoors with family over video calls and board games is also possible. It gave us an opportunity to reflect on our overindulgence and value the concept of spending wise and saving intentionally.
Have a will: There has not been a better time than this pandemic to put front and center the importance of every adult and the head of the family to have a will in place. People don’t want to think about dying one day and kick the can down the road, but no one saw and predicted the level of tragedy that occurred in 2020 and a recap with 2nd wave in 2021. You may be a millionaire or a middle-class person living on your paycheck, you still need to put down your will and desire for your assets and property for the sake of your family.
Need to stay Invested: The tumultuous market condition where it saw correction amidst the investors inability to differentiate between the economic ramification versus the news shared by media. A layer of complexity is added to the confusion. The financial markets were doomed and at days bleeding in red when investors chose to go cash fearing the worst. But the markets saw an uptick. The downward movement was momentary based on emotions and fear and the ones who stayed invested and invested further, when the markets were low made money and the ones with jitters and chose to go conservative were left with regret. The cornerstone of everyone’s investment should be to have a diversified portfolio that you can stick to regardless of the market environment. It’s all about your time in the market and not timing the market that matters in long run.
Have an alternate gig in place: When many lost their job and others had to keep their shutters down due to lockdown, online was the marketplace for all buyers and sells. People took the pandemic as a call to action and used technology to bail them out through teaching, writing, video content creating, consulting, opening online stores and also investing and trading to make money for themselves. People churned their hobbies to make money by turning in to bakers and chefs.
Life experiences often serve as a catalyst for the changing financial habits. There were many questions in everyone’s mind, but the pandemic reminded us to be safe than sorry.
This brings me to the end of @Blogchatter’s #blogchatterA2Z challenge and it was a thrilling experience for me as it was my 1st time and the thought of writing 26 blogs in a month was a little overwhelming but challenges bring out the best in me and so I had to take the plunge. From 6 – 8 blogs a month, a whopping 26 blogs did make me feel happy and now I have no excuses to not write.
However, rise in Covid cases did have an impact on me mentally when so many people around me and whom I have known tested positive. The fear gripped me, and I went in a shell for few days when I couldn’t think of anything else and hence couldn’t write too. But seeing my family safe and healthy, I was back to my old self and though delayed by 3 days, I finished my challenge and I am very ecstatic about it. I hope my readers enjoyed this series as much I enjoyed writing it.