Before the pandemic hit, maybe you had a stable financial life, collecting money and then spending it on sightseeing, impulsive shopping, and other habits that are not exactly bad because maybe these things are a way for you to stay ‘sane’. ‘ in the midst of work pressure. But who would have thought, when Covid-19 hit, everything changed drastically.
You will realize which emergency funds should be owned, which annual bonuses that should be in the form of money but instead turn into branded goods in the closet room. Many people have had to make adjustments during this pandemic, not only because their salaries were cut or layoffs, but because we don’t know when it will end or when we will be able to survive. Here are some positive financial lessons to be learned during the pandemic:
Start raising an emergency fund
If previously you only knew the vocabulary of saving or investing in finance, lately the words emergency funds must often be in articles or posts by influencers on Instagram. Many people do not know about the importance of an emergency fund. So emergency funds are funds collected to anticipate emergency situations that may occur at any time.
You can suddenly lose your job or your vehicle breaks down in the middle of the road and requires expensive service. All of this can be covered by an emergency fund, the amount of which can be adjusted according to the risk profile and dependents you have. In the past, the allocation of emergency funds could be inferior to the latest trends in clothes or bags, now when covid hits, many people are finally aware of this financial post and start collecting to have emergency funds.
Start looking for other sources of income
Many companies are cutting their employees’ salaries, laying off for an indefinite period of time, even doing unilateral layoffs. This teaches about the importance of not keeping all the eggs in one basket when it comes to income. Maybe you never really thought about how easy it is for our income to decrease or even disappear.
So, it is important for us to have income from more than 1 source in anticipation that if the main income source is disrupted, there are still other sources of income that can cover it. During this pandemic period, it can be a stepping stone for you to make your business a hobby or find freelance work that you can do from home.
Cut non-essential expenses
The third financial lesson learned is cutting out non-essential expenses. You may never realize how much you spend, even though you don’t really need it until the quarantine period comes, you have to #stayhome. Hanging out at expensive cafes, impulsive trips to the mall, hotel staycations every week, ordering food when you have groceries in the kitchen, gym memberships you only go to once a month, and more.
With almost all places closed, you will go through several adjustments until you finally realize that these things are not really needed and there are substitutes that are more economical and can save your savings.
Reduce spending with credit cards
A bad financial habit that many people probably do is use a credit card as an extension of their income. In fact, 40% of Millennials have the largest source of personal debt in the form of credit cards.
Before Covid-19 maybe you used a credit card for large purchases that you couldn’t afford, then turned it into installments. Of course, when the corona hit, income was reduced but credit still needed to be paid and this made me realize not to use credit cards as debt instruments. Make a credit card as a means of payment like a debit card.
Build financial literacy
If all this time during weekdays you have been busy working, then weekend becomes a time to hangout outside with friends or family, so there is no time to learn about finances or other things. Now is the right time to add skills in managing and planning finances.
Set aside a few hours each week to read, listen and watch a variety of financial content to improve your overall financial literacy. Every week try to implement one new positive financial change in your life. Start with a new habit of keeping track of all your expenses, challenging yourself not to order food out for a whole week, and more.
The biggest financial lesson to be learned during a pandemic is that no matter how much money you have or how stable your finances are, an emergency can strike at any time. Financial advice, which has been exaggerating so far, turns out to be true. Financial planning is something that everyone must do, regardless of how much money they have.