6 Ways COVID Should Change How You Think About Money

Pete Ross

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If the 2008 recession didn’t already show it, COVID19 has sure woken us up to the precarious nature of existence. Many people with good jobs in safe industries have found themselves laid off with no place to go because their workplace was shut down overnight. Even if you were in a safe spot, maybe your spouse got laid off and you’ve lost half your income that was used to pay the mortgage.

All of a sudden the multitude of things you bought that you didn’t need are a haunting reminder that you should’ve been more foresighted and prepared better. Those sneakers you bought because you thought they made you look fly, the watch you wear to impress business colleagues, the car with repayments that you know are too expensive, these are the choices that you look back on and think “god I was stupid.” You sacrificed the opinions of other people for your personal security.

With that in mind, I think now is a perfect time to look at money and personal finance. People are still dying and you may think this is a horrible time and perhaps even opportunistic, but sometimes the best time to really make a lesson stick is when it’s hurting the worst. The feeling is seared into your brain, so now is the best time to vow “I never want to feel like this again.”

The problem with money is that we’ve got hang ups and conditioning from our parents, our social class and our friends about what it is and what it means. Make no mistake, these psychological hang ups can be crippling when it comes to building the life we want and in the case of COVID19, can set us back years or completely ruin us.

Now one caveat — I know a lot of people are struggling, working multiple jobs, have lost their job or have student loans, so your instinct might be to fire back with “well that’s easy for you to say” and a whole bunch of stuff about privilege. This is not a social commentary piece and I don’t want to get bogged down with everyone’s special financial status. What I’m talking about here applies to everyone. It might be hard for you to see or enact it right now and that’s fine, we’ll tackle that at the end.

I want to start with what I think is the greatest truth about money that I literally have never heard once in my life from a financial expert:

Getting your act together when it comes to money will change your whole life. It‘s a goal that should be second only to your health.

Notice I’m not saying anything about being rich. For most of us, rich is something that’s never going to happen and it doesn’t matter anyway, because there are plenty of rich people who end up in a worse position because they have no financial literacy. After all, how many celebrities have we seen that have squandered fortunes so large that one could assume it’d be impossible to even spend it all?

So being rich isn’t the goal here, but getting your financial act together definitely is, because…

It teaches you to prioritise

Do I want that shiny new thing, or do I want that extra few hundred in the bank? Is it actually going to make me happy, or am I just buying it without thinking? Make the right decision a few times, and now you’ve got a thousand dollars more in the bank. When you stop living moment to moment making impulse purchases your whole life changes, because you’ve just learned to sacrifice fleeting happiness right now for security in the future. Believe me when I tell you that is a habit that will bleed over into the rest of your life. Your health, relationships and work will all be better for it.

Sure, you can’t take your money with you when you’re dead, but a house full of possessions you don’t need and no money in the bank during a crisis is a pretty bad state to be in. Now not only are you in financial trouble, but you have a place full of possessions reminding you of your lack of control when it comes to buying things.

It gives you a safety net

Boy are some of us feeling this right now. Earning a good income and saving a decent amount of it means that when bad things happen in the economy, or we get laid off, or we have to take leave of absence to care for a sick loved one, we don’t have to worry about money straight away. Sure, for most of us who aren’t rich there is a finite amount of it that will run out sooner than we’d like, but having that cushion should you need it is very comforting. My favourite personal finance guy, Ramit Sethi, recommends a year of savings before you look at investing or anything else.

That seems like a lot and it’s going to depend on your individual circumstances as to how feasible it is right now, but it’s definitely something you should aim for. I personally can’t hit that number for a while with a mortgage, but that doesn’t mean it’s not worth striving for. I think 6 months at an absolute minimum, because it’s going to give you the ability to weather almost any storm.

It gives you a platform to launch from to make more of money

Did you know that George Clooney made over $200m in 2019 and didn’t star in a movie? It’s because be founded a tequila company and just sold it. Jay Z and Puff Daddy (or whatever he’s called now) are worth far more than rap ever would have made them because they started clothing lines and made other investments. This is the power of having a stable base — it means that you can now go after opportunity rather than just trying to be safe, and earn outsized rewards for it. This is why the rich get richer.

Just imagine right now if you had 6–12 months worth of savings in the bank and you’re still earning money from your job. There was a lot of money to be made on the stock market over the last 9 months, so not only can you weather the storm, your life actually improves from it because you can capitalise on opportunity. On the flipside, you may know exactly which stocks to buy right now but if you don’t have the cash, that knowledge is useless.

More money = less stress

Just like having a platform to maximise opportunity, sufficient money gives you a platform of psychological health to operate effectively from. If you’re always looking at your bank balance, having to choose between which bill to pay or whether you get to eat something decent as opposed to a cup of noodles, your ability to function on a physical and psychological level and get after it on a day to day basis is really hamstrung. It’s going to permeate every part of your life, make it harder to sleep and put you in a constant bad mood. That’s not a way anyone wants to live.

While the statistic that 40% of Americans can’t put together $400 in an emergency isn’t correct, we know at least 12% can’t and that for many more, it would be a large strain. That’s a hard way to live under normal, every day circumstances. When a crisis like COVID19 hits, you’re essentially standing in an empty field with the tornado barreling towards you.

It’s far better to be unhappy and wealthy than unhappy and poor

It’s a really stupid dichotomy that always gets thrown out: “being rich doesn’t make you happy.” Well, who ever said or thought that it would? Talk to anyone who’s been broke before and they’ll tell you that they’d much rather be trying to work through their problems with a truckload of money in the bank than with nothing. Having no money is a such a massive problem that the only problem it doesn’t dwarf is serious illness. There is literally no circumstance where it’s better to have no money than it is to have lots of money.

The bottom line: do the best you can, but start now

Like I said at the start, some of us are in better shape than others right now. COVID19 should be a wake up call for you to take action and store your acorns for the winter. It doesn’t matter that the minimum wage isn’t increasing, it doesn’t matter that your industry has just been disrupted, it doesn’t matter that you have $150k in student loans. We all get screwed over from time to time and sometimes we should have seen it coming, sometimes it’s not our fault at all. You can’t wait for the government or a guardian angel to bail you out of trouble, you’re going to have to start climbing to the top of the hole yourself.

Don’t just throw your hands in the air like so many in comments sections do and say “I can’t save because I don’t earn enough!” If the minimum wage isn’t enough, do whatever it takes to either create a second stream of income, or get a better paying job, or reduce your expenses. No one said it’s fair or the way it should be, but it is what it is. Thus, your entire mission right now is to get up to the next level. I’ve been in the same boat in the past after taking a huge cut to my salary, burning through savings and even living with in-laws. All of it sucks, and I won’t insult you by saying it’s character building. But the reality is that the only one who will get you out of it is you, and complaining or putting it off for another day isn’t the way forward.

We’ve enjoyed a very long run of not much happening in the world apart from a couple of recessions. That’s not normal and we shouldn’t expect it to be. If you went to a farmer 500 years ago and told him not to worry about storing his grain for the winter and instead “treat yo’self” by buying some new clothes, he’d look at you like a crazy person. He knows that the world is unpredictable and that it’s better to have something but not need it.

Now is the time to get it together and start planning for the future, while the pain is still raw. Best of luck.

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I write about career, performance, psychology, self development and business humour. I'm an author, former national competitor in judo and strongman and a former military instructor.

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