People of all ages have seen impacts on their daily lives as a result of recent events, from health to finances and many other facets too. But when speaking of a younger generation specifically, spending has been one area that is notable. A recent report shows that 47 percent of Millennials have scaled back on their spending habits in light of the pandemic. One might be accurate in assuming that these numbers hold true across most generations.
Frivolous spending is one area that is focused on when teaching good financial habits, so it’s a bit of a silver lining when talking about financial lessons gleaned from a pandemic. Granted there have been fewer opportunities for people to spend — nightlife and entertainment venues have been shut down for the foreseeable future as an example. But given enough time, it’s also predictable that spending habits may change long-term once folks realize that some purchases just aren’t needed in their lives.
Lessons abound from this pandemic, the least of which is personal hygiene. How many of us had the thought, “Don’t you already do that?” when people started announcing that we need to wash our hands regularly as if it were some kind of medical revelation.
Other lessons however are more on the subtle side of the spectrum. For example, the commercial real estate market may experience a dip based on the realization that people can, in fact, work from home and remain just as productive. Over 5 percent of workers do their jobs remotely, which translates to about 8 million workers in the United States. We may well see a permanent spike in those numbers.
Financial lessons would certainly include following good, common-sense advice about saving and creating an emergency fund. Who could have predicted in March that we would still be pondering such vast numbers of unemployed? The commonly held rule of having three to six months of expenses in an emergency fund seems to be valid after all, and if you can stash away even more — you’ll be better off for it.
Paying off debt as soon as possible is another lesson to take away from our current situation. While stuck at home, with spending way down, it would be wise to chip away at those payments that are draining your income each month.
Taking wise financial advice and following a smart strategy by developing healthy financial habits so as to weather the financial storms that we may have to face in the future, is the key to financial well-being.
Bad money habits can have damaging, long-term consequences for our financial security. But developing healthy financial habits can do wonders for helping us achieve our long-term goals.
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