Lessons learned while sheltering at home
Advice might help with life after the COVID lockdown
Shelter in place. Lockdown. Quarantine.
Whatever you call it, it has been a few months since the COVID-19 pandemic taught us what staying home for an extended period actually looks and feels like.
These are unprecedented times. And although things are unpredictable right now, we can control our ability to emerge from this challenge differently than we entered it.
“Like everything in life, every challenge and every hardship is a lesson to be learned,” said Eric Simonson, certified financial planner and owner of Abundo Wealth based in Minneapolis.
Some of these takeaways are spiritual, emotional, mental or physical. And some are financial.
Here are three pieces of money advice you can apply to your bank account, budget and lifestyle as life evolves after lockdown.
Insulate against an emergency
Financial experts believe this pandemic has illuminated the pressing need for emergency funds and cash reserves.
“Financial advisers for years, I think, with a lot of people, could talk until they’re blue in the face about why an emergency fund is a good idea,” said Kevin Mahoney, CFP, founder of Illumint, a virtual financial firm based in Washington, D.C.
“But for people who were fortunate to have not actually experienced an unexpected medical event, a long-term job loss, whatever it might be, it can be hard to really convince people that this is a top priority for their money.”
Now, job losses, furloughs and medical emergencies have provided a tangible example of why these funds are so important.
The general rule of thumb for an emergency fund is to have three to six months’ worth of living expenses saved. That might or might not be enough, depending on the circumstances. If you’re able, save something now. Even $500 is a good start.
Prepare (don’t panic)
Emergency readiness will likely also extend to home pantries. For better or worse, when frenzy sets in, consumers begin panic shopping. Americans have seen the repercussions of that firsthand – disinfecting wipes are still difficult to come by.
Forward-thinking consumers will likely begin to accumulate a reasonable amount of essential supplies or stock an emergency kit in case they’re ever again unable to leave the house for an extended period.
“Consumers will adopt a mindset of ‘sufficient stockpiling’ as their awareness of life’s uncertainties has been magnified due to COVID-19,” Ross Steinman, professor of consumer psychology at Widener University in Pennsylvania, said in an email.
Although there’s no need to hoard, it might be beneficial to prepare in case other people once again panic shop for food and essentials at the onset of future emergencies. You might want to employ savvy shopping strategies for those necessary items that you will continue to buy. That might include purchasing bulk quantities at a lower price per unit, using products more sparingly or applying online coupons in an attempt to save money.
“During COVID-19, many consumers lost their primary source of income, or had it drastically reduced,” Steinman said. “As a result, individuals will be aggressively searching for discounts and promotions.”
Monthly expenses will likely also look different moving forward. Mahoney believes the stay-at-home orders have acted as a budget reset for many.
“It’s hard to press pause on spending habits that you’ve had for many years,” Mahoney said. But for months now, most people have been left with no choice other than to stop traveling, dining out, attending concerts and going to the movie theater. Budgets have therefore skipped over expenses that used to be recurring.
Some of these new routines might stick even when life regains some sense of normalcy. (Maybe you actually like those PB&J sandwiches at home.
Or maybe you will continue watching movies at home instead of in the theater.)
If these do stick, it’s possible you will spend less discretionary money in the months ahead.