The crisis made most people change the way they handled their finances. Before, most of us indulged in our wants while keeping in mind the “you live only once” or YOLO mindset. Nowadays, everyone tries to live such a practice with caution, knowing financial health should also be a priority.
Before the pandemic, many don’t even invest in their savings. They only save when they think they can and when they want, with most people not even having enough emergency funds to last them a few months. Others focus on increasing their savings without exploring other ways of growing their wealth.
But because of the crisis, everything changed. From the way we live, work, play, and manage our finances, we made changes to conform to today’s new normal. The following are just a few examples of ways the crisis impacted our personal finances.
Changes in Our Spending Habits
Sheltering in place, learning from home, and working from home enabled many people to reduce their household spending. With most members spending more time indoors, many households were forced to increase their savings by reducing their spending on non-essential expenses. This is since they are now spending less on travel, beauty, entertainment, and food and drinks.
We now prepare and cook home-cooked meals more often than takeouts and deliveries. More people stayed at home and went on “staycations” to reduce their risk of exposure by traveling. Parents try hard to keep family members happy and entertained without going out in public areas.
Many even reduced the way they spend on beauty. More people now focus on skincare alone instead of makeup. With these changes and all the sheltering in place practices, we unintentionally force ourselves to reduce the way we spend our hard-earned cash.
Changes in Our Saving Habits
The crisis made even healthy individuals rethink the way they save for future expenses. They quickly learned how non-judgmental the pandemic is. Even those who thought they had enough savings in their emergency funds learned how crucial it is to start saving more regularly and constantly.
The pandemic highlighted the need to have emergency funds for virtually everything, including health emergencies and unemployment. This made people truly realize the importance of having a financial plan. Now, more are committed to building their own emergency funds.
Aside from having a separate account for their savings, investing in a high-yield savings account is advisable. These usually offer more competitive rates thanks to their higher interest rates. Since these also have a higher maintenance requirement to keep the account and earn interest, people are forced to save consistently.
Changes in Our Investment Mindset
The crisis made people reconsider investing. Before, many were afraid to make investments. But during the pandemic, more people were enticed to start taking risks despite the high number of businesses shutting down mid-crisis.
Many decided to launch their own business while others went on exploring other investment alternatives. This is aside from stocks, bonds, private equity, and real estate. For some, they went on investing in gold, derivatives contracts, cryptocurrency games, and arts.
Not many people think they can generate income from art reproductions. In reality, high-quality reproductions of fine art can be valuable investments. This can be a perfect choice for people who are into art and are considering collecting art.
Gold is another investment alternative that many people are looking forward to collecting. This tangible asset is something you can wear on different occasions. The best part is you get to sell these for a price in case you need extra cash in the future.
Those who are interested in advanced investing are now placing their bet on derivatives. This way, they can accomplish one if not all the following perks:
- Insure an asset’s risk by hedging a position
- Leverage options when markets are deemed volatile
- Bet on an asset’s future price through speculation
The number of individuals investing in cryptocurrency games is also growing during the crisis. They like the idea of investing their internet money in something they can play and enjoy. When play-to-earn gaming and cryptocurrency collided, this gave people hope that even during the crisis, they can learn how to have fun while investing.
This is just a list of how the pandemic reshaped the way everyone handles their finances. Some went hard on investing while others were forced to save. Some households can now stick to their budget after sheltering in place, and lockdowns made them spend most of their time indoors.
Even if the crisis did change our lives in many inconvenient ways, we can’t deny that it made us realize the importance of financial literacy. This continues to make us rethink our financial choices, so we can start living a more financially responsible life.