Today is a brief blog but I just want to do a reflection on what I have learned about finances during Covid-19 and what lessons I am taking forward. There’s no need for me to really explain how tough of a time it’s been for many across the globe mentally, emotionally, and even physically. But for many a strain on finances has thrown an extra spanner in the works. One thing I have come to realise is that there is no way you can predict the future; no one would have ever believed a global pandemic would have shut the world down in the year 2020 – but it happened!
This has really highlighted the importance of preparing for the worst, even if you are an optimistic person. Financial preparation for the unexpected is easy to achieve if you put your mind to it, but here are some lessons that I wish to share with you:
1. Living pay cheque to pay cheque is bad for your mental health
They say that most people are just one emergency away from financial ruin, and this honestly is very easily done when living pay cheque to pay cheque. The problem with living this way is that you are unconsciously always on edge because as soon as you’re paid and all the bills come out, you’re desperately waiting for the next payday. Being financially vulnerable can result in being mentally vulnerable, because it can take only one unexpected circumstance to occur to put you on a back foot. This can cause anxiety and can even spiral into depression. The great thing is that there are easy solutions to stop living this way, such as building up an emergency fund and reducing monthly expenditures, but it does require a bit of effort and patience to achieve this. It's worth it though!
2. Living below your means is powerful
Living below your means is a dirty phrase to some, but there truly is power in it! It doesn’t mean you cannot have fun and enjoy life, it simply means learning to live on LESS than you earn. So if you earn £2,000/month, learn how to live on £1,700/month and save £300/month. It seems so difficult at first but it’s incredible what can be achieved when you take the time to comb through your finances and find places to cut back.
3. Old habits die hard - but you can still beat them!
Coming out of lockdown into the sunshine makes it very tempting to spend, spend, spend! But don’t lose sense of what financial benefits you’ve reaped during the Covid lockdown. It’s quite likely that you spent a lot less than usual during this time, and guess what - you did not die! So consider what good habits you can take forward with you now the lockdown life is ending, and what bad habits you can leave behind. For me, I am staying strong with spending WAY less on eating out. It was out of hand before Covid (rouhgly £10 per day) and I refuse to go back to those ways now. What is it for you? Let me know in the comments!
As I said, short and sweet but I hope this blog has given you some food for thought. It’s in the tougher times in life we get the best lessons, so I really hope you’re going to walk away from this time bigger and better than before.
29-year old living in the UK who is actively working towards achieving Financial Independence (FI). Sharing all the tips and tricks I am learning along the way!