This should go without saying. Despite what Dixon Tam may allude to the contrary, I am not at all a financial expert of any kind. I can only speak from my own personal experience. Naturally, everyone’s circumstances and priorities are different. If you’re looking for guidance or advice, leave it to the professionals. For my part, though, here’s what I’ve seen in terms of my own personal finances during this pandemic.
On Privilege and Income Inequality
It’s obvious enough at this point that less affluent people in less advantageous situations are being hit much harder. If you don’t have a significant “emergency fund” saved up and you’ve been laid off, managing your personal finances can be incredibly stressful under even more “normal” circumstances. The pandemic situation just complicates (and isolates) things even further.
If you’ve been able to keep your job and work from home, like I have, then the “income” side of your life may not have changed all that much. My wife works at the hospital, so as an essential worker, she’s kept her job too. We’re still working like how we were before the coronavirus outbreak, and I very much recognize this is a position of immense privilege.
There are so many other factors involved, like if you’re eligible for government support or if your childcare situation has been thrown into a tailspin. Or you live in a dual income household where you can lean on the income of one partner or the other. Situations like this really illuminate the income and opportunity inequality that’s already pervasive in our society. Our family is really lucky, and I recognize that many others are not.
On Investments and Retirement
As you may already know, the markets took a pretty big hit at the end of March and the beginning of April. With it, many people watched as their investments and retirement savings drop several percentage points. I know mine did, though as someone with a relatively low risk tolerance, I didn’t get hit as hard as some other people.
This drop had me worried at first, because I was concerned that further drops were on the horizon. I was tempted to sell off some of my mutual funds to mitigate that risk further, but I resisted the temptation. My retirement savings have a really long investment horizon and the market has always come back eventually. From what I can gather, the market has recovered at least a little, so my investments seem reasonably safe for now.
I know it’s cliche to refer to these “uncertain times,” but it’s true that these times are indeed uncertain. And sometimes, in times of uncertainty, the best action could be no action. It could be choosing to wait and see, rather than make a hasty, knee-jerk decision based mostly on emotion.
On Expenses and Spending Money
When it comes to my personal finances during this pandemic, my income has been largely unaffected. My investments took a hit, but they’ve mostly recovered. Where I’ve really seen a change, though, is with my spending habits. After all, I’m spending even more time at home than I normally would, just like everyone else.
Looking at my most recent credit card statements, I’ve spent about half as much in April as I do in an average month before the pandemic. For one, the last time I bought gas for the car was around the middle of March.
The big one, though, is what my credit card statement categorizes as “eating places.” You know how much we love to eat out. I literally spent about 1/5 as much on “eating places” in April as I did in previous months. That’s what happens when you’ve only got takeout and delivery with no dine-in options! We’ve been cooking and eating in so much more, just like everyone else.
On the flip side, I’ve justified at least a couple of impulse buys to myself. I said, “Self, you’re already spending less money elsewhere. So, it’s okay if you go ahead and buy Animal Crossing and Just Dance 2020. You’ve got to entertain yourself while at home, right? And you may as well pick up a new pair of shoes from Vessi. It’s a good deal! Even if you’re not going to actually use them nearly as much, but that’s okay! You’re supporting the local economy!”
Adapting Personal Finances to the New Normal
As I said in my 20 questions post last week, it’s less about waiting for things to “go back to normal” and more about defining what we want our “new normal” to be. And then learning how to adapt to this “new normal” accordingly. Personal finances are no different. Really, this gives us a greater opportunity to reconsider our priorities and where we choose to spend and save our money. It’s almost like the so-called “latte effect” has been thrust upon us.
Do you find that you’ve spent much less money while under lockdown? Have you given into more online shopping and impulse buys? Do you think about money differently?
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