In an event that’s so horrific like this pandemic, I am searching for something to cling to and be able to continue writing here. At some point, and I wish I knew when, life will once again become more normal. And when that happens, personal finances will once again be a huge topic of conversation. But, actually, it really is even right now. It all comes down to wants versus needs.
Now, during a real crisis, is one of those times when it’s particularly important to understand what you really need, as opposed to stuff you just want. The COVID-19 pandemic is the reason why prioritizing your needs has become so important. It was perhaps all just fun and games for some before this so called “gut punch”, but it’s not anymore!
That’s exactly why it’s critical to know what is really important, what you really need and will ultimately help protect you and your family during this situation and then for all of your future, too.
“Never Waste Your Money” Is Truer Than Ever
Many people have no choices when it comes to their spending and for those people, spending is almost always based on their real needs. Low-income wage earners, the disabled, the elderly, or simply the unemployed and/or the homeless think about survival and are forced to spend wisely if they have any money to spend at all. They hope that they have the money for food, clothing, and shelter. If they don’t do that, they sometimes die or at best suffer very, very badly.
For the rest of us, those who have a job (or had one until we just recently lost it because of the virus and its dramatic impact) the wants and needs issues are just as real. If you have money and don’t protect it and spend wisely, you will suffer real pain and that can last even longer than just what this virus is causing.
The “New Car” Example
I know this may sound like a curve ball, but it’s an example I want to share. In good times, before a crisis, I have asked myself this question quite a few times:
“I can afford a new car, but why would I want to waste my money like that?”
I have asked myself that question and it’s one you should ask yourself, too. Why? For one, it’s a great example of what we sometimes do when we don’t prioritize and it’s something that almost all of us have thought about or done once or even more than once in our lives.
Why a new car? For one reason, we say we can afford it. That is probably true when we do it or at least it’s true that we can afford the payments for it. But do we really need a new car?
If you are making prioritized decisions that are really good ones, you should consider a used car if that’s much more cost effective rather than get a new one. A used one rather than new costs thousands less and you may avoid the interest and taxes on it for years and years too! But the question is simply an example of the thinking you need to use right now more than ever.
Just Because You Have Money Doesn’t Mean You Should Waste It
You should never waste money. And that’s especially true at this moment during the pandemic. With layoffs mounting and incomes shrinking, you have to make really good decisions right now. Decisions that may affect you for months and years, you just don’t know for sure.
You are right now sitting at home and perhaps a bit bored and looking around the internet searching for some good news or something that can make you feel better. Sometimes that means shopping online.
Incredibly, I am now seeing more and more ads about shopping and buying online. My email is filling up with all kinds of ads to entice me with bogus sales and short term opportunities to make purchases while we are all cooped up in our homes!
I could even buy a new car online and have it delivered right here to my house. To me, that is just crazy, but the power of advertising and the desperation of so many to try and make themselves feel good about things during a crisis can work for these advertisers. That’s scary to me. But trying to feel good about things is often practicing the art of spending because sometimes buying stuff makes us feel better and there’s real danger in that.
Reasons to Protect What You Have for as Long as You Can
When you are sailing along in life, advice you hear may just be a low volume buzz in your ear. It may not actually cause you to change your behaviors or make any differences in your finances…if you’re lucky, things will be fine. But things may be different right now.
Many economists say a coronavirus recession is on the way, if it’s not already here. If the economy is going into decline, you need to be concerned, even if you’re still holding on to your job and even if you have money stored away for an emergency.
If you are thinking, “Why should a recession matter that much to me?”, think again! It matters to you because when something recedes, it pulls back and everybody’s spending and money are affected. More jobs are lost and life can start to look like it did in an old movie, like the “The Grapes of Wrath” during the Depression did and sometimes those jobs take years or never ever come back again!
Learning to Live with Less Is Actually a Business Mantra
Saying something about and seeing jobs actually disappear isn’t a new concept or fear of mine. I have actually seen it happen over my work life and beyond many times.
Whenever an economic setback happens, caused by a virus or anything else, the first thing any business does is to cut expenses and the biggest expense any business has is payroll!
It is easy to have layoffs and cut hourly employees. When they do it, it makes them feel better quickly. It never insures their survival, but it sure does save some money. And it has other effects too.
Fear Is Inspired by an Economic Downturn
You know someone (I am sure) who was thrown out of work in the last recession. That guy you know or knew…where is he today? Did he ever return to the job?
The answer to that sometimes is a resounding “no” and chances are you will never see him (or her) again. That happens because the work environment changes rapidly after layoffs and terminations take place.
The remaining employees have to start to work harder, longer, and with a pace that they never knew they could or had within in them. It is a means of self-protection and survival, and who literally benefits from that? Well certainly you do in a sense that you get to keep your job and paycheck, but ultimately your employer gets the win because he now has better productivity from his very highly motivated work force.
This isn’t just my theory, it’s a proven fact that I have seen happen in my career, starting way back during the oil crisis of 1973 through the many economic downturns that have followed since then.
Two Good Ideas to Help You Through the Recession
Before you spend your next dime on something other than food and shelter, why not use the time you have on your hands to find a side hustle? You could do something as silly as write a blog, but seriously there are so many side gigs that people do these days. Even the government has recognized that side gig folks will get an unemployment check and will also get a $1,200 stimulus check.
That’s quite astonishing since those jobs were never considered to be in the mainstream, but now have become plentiful, meaningful, and are growing day by day. In fact, if you haven’t ever considered it, you may now be part of the minority of people who haven’t!
Using your time to create a gig may require a little money to start up, but it’s money well spent and is a great way to perfect your “wants versus needs” priorities. What side gig would you be good at?
As far as the stimulus check goes, getting that check in the next few weeks gives you a great opportunity. Why not take all or part of that money, if you can, and fund or add to an emergency fund? Look, even if you are out of work right now, you are going to get both your normal unemployment funds and also get the balance of up to another $600 to help cover almost all, if not all, of your salary! The stimulus check can be almost a gift if you are getting your pay covered. So please, try and not spend it but save it wisely!
Here’s the short version of what I am saying here. Save as much as you can save during this virus pandemic and take all kinds of other steps to protect yourself, your family, and your finances from a COVID-19 downturn.
Don’t let the free time dictate that you should just waste your money. In fact, by staying home for the next month or so, you will actually be spending less discretionary money and saving will become even easier—if you let it happen. Why not let this crisis turn into something that will be some kind of beneficial time for you.
What are you doing with all your free time? Spending on wants versus needs, or saving? Being creative? Finding new ways to earn money? If not, why not start right now?