5 Post Pandemic Money Lessons You Need to Learn
Bringing peace and hope to your financial future …
As the Covid-19 pandemic spread throughout the world, it become more than just a deadly virus. Even if you escaped contracting the virus, no one was able to escape the widespread side effects that came from the global shutdown.
From job loss to depression to empty store shelves and loneliness, the impacts were unavoidable. There are some great financial lessons we can learn from all these hardships that should help to better prepare us for the future.
1. Start or Grow Your Emergency Fund
According to one survey1, 42% of U.S. households claim that someone in their household either lost their job, had to take a pay cut or were forced to reduce work hours. Half of those who were laid off remained unemployed at the time of the survey in August of 2020 (months after the pandemic began).
Those are some grim numbers and no doubt those families struggled financially.
Job loss and layoffs are a common occurrence. Every family has a certain level of risk whether from company changes or even a serious injury that prevents work. It doesn't have to take a pandemic to lose your job.
It’s important to have a healthy savings account for emergencies such as this.
A small emergency fund of $1,000-$2,000 can help through a simple emergency or a job loss of a short period of time.
Ideally, you should save three to six months’ worth of living expenses put exclusively into an emergency fund.
This money will allow you to pay for food and your rent/mortgage for an extended period of time without having to rely on others to assist you who may also be struggling financially.
Keep this money in a savings account where it is readily available to access. This isn’t investment money, it’s insurance, so keeping it in a savings account is ideal.
Related Article: The Quickest Way to Save for an Emergency
2. Establish Food Storage
I was guilty of believing that I didn’t need that much food storage in my home. After all, I could always go to the grocery store and get what I needed.
It wasn’t until the store shelves went empty for months during the pandemic that I took the idea of food storage seriously.
Many products were sold out and you couldn’t come by them unless you were lucky enough to be at the store when a new shipment came in. Within minutes, the new small supply was seized by anxiously waiting shoppers. A new supply might not be seen again for weeks.
My kids wanted mac and cheese, which was one of many items that were sold out. I thought, “oh well, I’m sure I can find it online.” I found a case of 8 boxes on eBay for over $70! That’s when I realized things had gone to a new level of wrong. Others were taking advantage of the situation and price gouging already struggling families.
Having a food and basic needs (like toiletries) in storage can alleviate a future financial burden. If you find that money is tight, you can cut back on grocery spending and live off the supplies you’ve stored up. This will help you extend your emergency fund even further.
Building a food and supply storage doesn’t have to happen all at once. Each week that you are at the store, you can buy a few extra things that you intend to save and build up a small stock pile.
This worksheet has a simple plan to build a supply over several weeks. Alter it as needed and keep an eye out for items on sale before you buy them for your supply.
3. Get Appropriate Insurance
Many families are burdened by rising costs of medical care. One trip to the emergency room can wipe out an HSA account that may have taken months or years to accrue.
The pandemic put many people into the ICU, but on a lessor scale many people suffered an increased amount of depression and anxiety simply from the pressures of life.
No matter the level of care, you do need to care for your health. It’s important to have some sort of insurance to offset the cost of expensive medical care.
My family uses an HSA account that has been a life saver. We contribute pre-tax money and use the card for anything from prescription medications to visits to the doctor.
HSA money is exclusively for medical expenses and it’s a comfort to know that it will be there when we need it. It does take some time to pad the account, but regular deposits add up and provide peace of mind that a medical emergency will be able to be paid for and won’t add to financial stress.
4. Pay Off Debt
During financial hardship, debt may be robbing your family of their basic needs. The last thing you need is collectors breathing down your neck.
While it’s fun to splurge every once in a while, you can plan for fun spending without compromising your family’s security. Relying on credit cards can be detrimental. If hardship hits and you need to cut back your spending, you won’t want to have the burden of paying a credit card or other debt on top of your living expenses.
Related Article: The Secret to Pay Off Debt Fast
Related Article: Debt Snowball vs. Debt Avalanche - Which is Better?
5. Use a Budget
Keeping track of incoming and outgoing money is essential whether you’re living through a hardship or not.
Managing your incoming and outgoing money ensures your expenses will be paid and will give you a clear picture of what you have available to save for the future and what you can spend leisurely.
A budget is simply a plan for your money. Being intentional and creating a plan will yield bigger returns for future years.
Living on a budget doesn’t mean you can’t do fun things. On the contrary, if you want to go on a vacation, make a plan for it. If you want spending money for clothes, put it in the plan. You might have to hold off for a bit while you save up, but it will make the accomplishment that much more sweet when you finally achieve your goal.
Related Article: Budgeting 101 – How to Start a Successful Budget
While recognizing that not everything will go perfectly, having a plan for your finances will help to bring peace, hope and security to an uncertain future.
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