The Financial Lessons Covid-19 Taught Me
Cloth Masks. Shelter in place. Physical Distancing.
Over the past 5 months, these words have become a part of our daily conversation.
During this time, it got me thinking about the lessons that we have learned, new approaches that we have taken to cope, manage and, dare I say, thrive.
During the last 150 days I have confirmed the following 3 things:
Taking the time to work out and maintain my sanity is essential. I have been taking daily walks and working out 3 times a week
Maintain connection with friends and family is also key. I see my parents every week (wearing masks and sitting 6’ apart) and having weekly Zoom calls with friends
Having a financial structure in place in case of an emergency is essential
I also believe that this crisis has raised the awareness about financial preparedness, and has reinforced 3 financial lessons:
The need for an emergency fund
This pandemic brought front and center the importance of having an emergency fund. With all of the job losses, furloughs and company closings, having a pocket of cash, or access to cash, is required to buffer for tough times.
Over the years I have learned that when it comes to a rainy day fund, a rule of thumb is to have 3-6 months of living expenses saved. I know, that can be hard to tackle all at once, but I encourage people to just start, even if its $100 a month. Here is a tool that you can use to start and emergency fund.
What I thought was important to spend money on has changed
My spending habits have dramatically changed. Now that I am working full-time from home, my daily coffee run has turned into a bi-monthly Nespresso purchase. Where I was spending $6.35 a day ($127 a month) on my daily coffee. I now order coffee capsules from Nespresso. I purchase 2 sleeves ( capsules) for $15, which translated to .75 a cup of Joe. So $30 a month, support my coffee habit!
I am fortunate to be able to work from home so i have no need to shop. I do not need new shoes, tops. blazers, etc… For my daily ZOOM meetings, I wear a nice shirt/long sleeved t-shirt and a pair of yoga pants/shorts – this is my new work uniform.
This pandemic has made me take an even closer look at what I am spending money on. And really focused on buying what I need; and I am not missing the items that I cut out of my life.
The emotional spending struggle is real
When we were first told to shelter in place, my friend shared with me an article from the NYTimes about the best grocery items that people should buy and keep on hand at home. That night when I went to my local grocer and I saw people frantically, and infamously, stocking up on items like caned soup, flour, toilet paper and Lysol® disinfecting wipes.
Please note that I have certainly done my share of shopping. During the 3rd week of working from home, I jumped on the Amazon bandwagon and bought items for my home office, like a new wireless keyboard and mouse, Jabra Bluetooth speaker and a laptop stand. All necessary items to make my home office more functional.
One area where I found that I was experiencing emotional spending was at my local grocery store. Usually I spend $50-$60 a week to ten days. During the first few weeks of the shutdown, my grocery bill went up to $100 - $120. I was continuing to buy nutritious foods, but I as also doubling up on items like milk, cereal, juice, rice, soup and frozen veggies - and wanted to have a stash of item in my pantry & freezer.
With all this shopping, I got a rude awakening when I received my credit card bill, I realized that I was overspending and decided to jump on the Cash only challenge that Carrie Schwab kicked off in June 2020. The premise was easy, for 14 days, only use cash for all purchases (except mortgage/rent, and utilities, of course!). I took up the challenge and for the next 4 weeks, I only spent cash and only bought what I needed.
For my next shopping trip, I used a grocery list and no credit cards. I realized that by taking this small action, I was able to curb my emotional spending and I have become a more intentional grocery shopper - although I often sneak in some Miss Vickie’s chips!
Summary
Living in the time of Covid has amplified the importance of financial preparedness. Having, and following a budget, tracking spending, and trying to buy what I really need has certainly been helpful.
So there you have it, my thoughts on how Covid-19 has affect my spending. Has Covid changed the way you spend/see money ? Share how you have adjusted your spending during this pandemic.