Money Lessons from COVID-19
May 25, 2021
The COVID-19 pandemic changed the lives of not only the millions of people who suffered from the disease, but also the tens of millions who struggled from the economic impact of the crisis. The everyday routines of people changed as well, as many of us learned to work from home or shop differently.
Because of all these changes, perceptions have changed about money. Here are some financial lessons learned during the COVID-19 pandemic:
Experiences matter more than things
Because of tighter budgets and limited in-person shopping, many people weren’t able to buy the things that they previously considered important. On top of that, the pandemic prevented family gatherings, time with friends, vacations, and other important social experiences. As time passed, it was those experiences that sometimes were tougher to live without.
As a result, experiences seem to have become a spending priority. Sales of board games and jigsaw puzzles surged. Ambitious novice chefs splurged on ingredients and attempted new cuisines. Travelers who otherwise swore by five-star hotels embraced camping. For many, this new priority on experiences might continue.
Economizing offers real savings
With less money and more time, planning and decluttering became a worthwhile (and sometimes necessary) effort during the pandemic. In doing so, people learned how to better stretch their budgets. For example, we all know that cooking from home is less expensive than going to a restaurant. But when there is no choice but to cook from home on a regular basis, the savings become real. This lesson in economizing is an important part of good financial planning – one that we encourage you to adopt long-term. Your future budget will thank you.
The seesaw effect
One-time commuters may have saved money on gasoline or other transportation expenses only to have an increased electricity bill because they were home more. By not going into the office, you might have purchased fewer work clothes but spent more on yoga pants or basketball shorts. The pandemic produced spending shifts. As you plan your budget, consider the financial trade-offs that might occur as you redirect your spending.
Did you really miss it?
Whether you were working from home or had less discretionary income, you may have gone without picking up that daily latte or lunch near the office. Movie theaters sat empty, fewer people went to restaurants, and attendance at sporting events was limited. After more than a year of missing out on such things, how much do you truly miss them?
As the pandemic has wind down, you can spend time at your favorite restaurant or a Warriors game. You can also choose to reintroduce these minor luxuries as special occasions instead of regular occurrences, setting aside the money you would have spent on that outing towards your savings.
The importance of an emergency fund
As unemployment ballooned following the initial lockdowns, many scrambled to make ends meet. In the middle of an emergency, those who had built an emergency savings fund had something to fall back on.
Saving when your budget is already tight is understandably tricky. However, no one knows when the next personal or national crisis will occur. COVID-19 has shown that an emergency fund helps us to better handle these unexpected occasions.
Additional benefits of owning a home
The pandemic also reinforced that a home can be one of your greatest financial assets. While property values were high and interest rates were low, many homeowners used their equity to their advantage. Home equity loans and lines of credit are two smart ways for homeowners to make the most of their investment when they need money for home improvement projects, tuition, medical bills, and other needs.
In any emergency, when you’re not sure who or what you can rely on when it comes to money management, know that your financial institution is there for you and wants to help. If you have questions, contact us and allow us the opportunity to assist you.
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