What most of us thought to be an awesome and promising year, turned out to be a disaster. The Coronavirus pandemic took a toll on humanity. It began as a harmless virus and it ended transforming the world as we know it.
Due to this pandemic, many people have lost their jobs. Industries such as traveling, food, or sales have been impacted by this deadly virus. It aroused feelings of fear, anxiety, and stress in many people, negatively affecting both your mental and physical state.
And when governments took nationwide measures to slow the spread of the virus, all people were forced to remain at their homes unless they go shopping. This means that the range of activities people performed during quarantine is quite narrow. You do not go to big events, weddings, concerts, movies and so on anymore. So, it might be that this quarantine helped some people save money.
But at the same time, parents have spent more money during quarantine, as classes have moved online. Children need laptops, accessories, and other items to be able to take part in online courses. And the situation gets worse in the case of parents that have lost their jobs during the quarantine. They lost their income, so surviving this crisis becomes a real challenge.
So, what did quarantine teach us about personal finances?
Always save for an emergency fund
The truth is, the way the world goes is unpredictable. And this pandemic confirmed this saying. Given the fact that plastic pollution is at unprecedented levels, it has a negative effect on our weather and the way some viruses evolve. Besides, people have irresponsible behaviors. We can expect more weather imbalances in the future, and all these catastrophes come with economic consequences. Like this one.
The coronavirus pandemic took the world in an economic recession. The proof is that more and more companies decide to fire their employees due to lack of activity and few companies are looking for employees. So, these people need to find ways to survive this crisis. People who were not used to saving money for an emergency fund now fight for survival.
This emergency fund would help you meet your daily costs while looking for a new job. It helps you live during harsh times when you would not have an income.
Have a backup plan
Most people think that their jobs are safe and secure and that they do not have any possibility of losing them. Putting so much trust in a 9-to-5 job can turn against you, just as the coronavirus pandemic showed us.
Having a backup plan means having an alternative source of income. Even though it is not permanent, just having it can save you the stress and panic you would feel if you would lose your job. Also, it does not have to be in the form of a regular job or in the domain you are already working in.
There are many part-time opportunities, such as freelance writing, graphic design, or testing.
How to budget
If we talk about the most important lesson this quarantine has taught us it is that we are spending money on things we do not need. Most of these activities could not be performed during the lockdown, such as going to concerts, movies, shopping in malls, and so on.
Indeed, some of these activities are relaxing and if you love watching movies, you will probably start going to the cinema as soon as it opens. But other activities, such as daily shopping sessions might seem not so affordable now with the economical struggles we go through.
If these costly activities stopped during quarantine, they should stop after everything opens again. This quarantine showed us how we spend our money and how much we can save if we let go of unhealthy and expensive habits. And given the fact that the economic problems will likely continue for some months and years until we recover completely, we all need to learn how to budget our money.
Dealing with these times is not an easy task to do, especially from a financial point of view. This is why you need to analyze your expenses and budget them carefully. Stop spending money on unnecessary things and items and save some to your emergency fund.
Think twice before taking a loan
Loans are incredible tools that can help you fulfill your dreams. You can take a loan to buy a car, a house, or an apartment. They can help you avoid some years of saving money and paying rent, so most people think of it as a good idea.
At the same time, this quarantine and pandemic taught us to not take loans we are unable to repay. Not being able to do this will lead to acute levels of stress and, in some cases, the loss of some assets. Many people are in this position, where they lost their jobs due to the world pandemic and do not have enough money to pay the loan. Which is a big predicament with no easy solution.
This pandemic resulted in many deaths and job losses. But it also taught us some important principles of personal finance. Always save some money for your emergency fund. It will save you in case you lose your income. Think twice before taking a loan and always have an alternative income source. Eliminate unnecessary expenses and budget your money better.
Leon Collier is a freelance writer who collaborates with the best essay writing service in the UK. He writes essay reviews on topics such as economy, psychology, and risk assessment. Leon loves sharing tips and tricks for personal finance, self-development, education and traveling. When not writing, you can find him behind a book or hiking in the forest with his friends. Follow him on Twitter @LeonCollier12