Personal Finance Lessons That You Should Have Learned from COVID-19

• Author: Kelly Cooke
• Posted: 2024-08-05

If you are like millions of other Americans, the COVID-19 crisis dropped a large bomb in the middle of your personal financial situation. While you may still be struggling to cope with financial dislocation, you should at least be thinking about the long-term effect on your finances. Even if you are not thinking about the bigger picture, there are actually opportunities to improve your finances in the wake of dislocation that should not be missed. In other words, you can use COVID-19 to make a fresh personal financial start. Here is how you can turn a crisis into a personal turning point.

Eliminating Unnecessary Expenses Was an Opportunity

One of the "opportunities" for you that can come out of COVID-19 is the fact that you may have used it to cut unnecessary expenses out of your budget. If you were affected by the pandemic, chances are that you were forced to perform a line-by-line assessment of your budget in order to justify everything that you spend. Hopefully, you were able to find some expense items that no longer made sense for you or that you were able to downgrade. For some people, the COVID-19 pandemic was the equivalent of a crash diet that forced them to make sudden changes in a hurry. It is important not to lose these lessons that you learned during the crisis. While nobody is suggesting that you permanently remain on an austerity budget, learn to regularly examine each budget item.

Continue to Closely Track Your Spending

Another habit that you may have taken on that you should be keeping is remaining intentional about your spending. In the past, you may not have had the time or the will to go through your credit card bills line-by-line to get a handle on your spending. You may have been forced to initiate this habit in the past few months. It is never a bad use of time to analyze and track your own spending. While you do not need to stress about each line of your credit card bill, you should be aware of the money as you spend it.

Continue the Savings Habits that You Started

Even if you did not lose your job or have your income cut, you may have increased your savings to have money on hand in case you did feel some impact from the crisis. If you did this, you are not alone. The American savings rate shot up in March as people began to worry about what the COVID-19 economic crisis would do to them. If you are one of the people who began to save during this time, you need to keep this up in the future. While you may not need to save at the same rate as you did during the crisis, you should always be putting money away each month.

Act Defensively Financially

There are very few points in life where it pays to be aggressive with your personal finances. Your general attitude should be steady and moderately conservative because this is how you will achieve your long-term goals. However, you have gotten away from the bedrock personal finance principles that work for most Americans. COVID-19 may have forced you to dial down any aggressiveness and adopt a defensive personal finance posture. This is the attitude that you should continue to maintain in the future. To the extent that the pandemic helped extinguish any of your financial excesses, this was for the best. You should not rush to reestablish any sort of unwarranted aggressive posture in your financial life.

Your Priorities Changed

The other thing about your finances that may have changed is that your priorities shifted. The amount that you spend probably has dropped considerably in the past few months. Your attitude probably became one of prioritizing the necessities and making sure that you get by each month. What you should take out of the coronavirus crisis is a renewed sense of what is important to you financially. Sometimes, being able to keep a roof over your head and food on the table each month is a win. Make sure not to forget that feeling when things return to normal. Being grateful and appreciative of what you have and the ability to make it is a valuable personal finance skill. COVID-19 served as a reminder for people who had forgotten this key principle.