Lifelong Money Lessons That COVID Lockdown Taught Us

Ever since it jolted the entire world about 2 years back, the COVID-19 pandemic has been nothing short of a wake up call for everyone, both in terms of health and wealth. The tag of being one of the biggest crises of the century in itself tells you how bad things have been. And on top of it, the endless restrictions and lockdowns induced by the pandemic brought the world to a standstill. Now, even as countries has been opening up and adjusting to this ¡®new normal¡¯, let¡¯s not forget these lifelong money lessons that this pandemic has taught us.

1. Emergency fund is not an option but necessity

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The pandemic has in itself been an emergency, and that too a long term one. Millions of lives have been lost all over the globe, besides taking away the livelihood or damaging the income inflow of many. Amidst all this, a lot of us might have realised the absence of sufficient savings, especially to tackle such adverse exigencies of life. This is exactly where having an adequate emergency fund can be your saviour. Just set aside at least an amount equalling to six to nine months¡¯ recurring expenses, like utility bills, EMIs, rent, etc. This way, you would be better prepared to deal with future financial emergencies.

2. Health is wealth

There could not have been a bigger and worse wake up call for anyone than this pandemic to make us realise the importance of having health insurance. For many, this pandemic might have been the forced push they needed to buy adequate health insurance to cover their family¡¯s, and own medical expenses. While health insurance should anyways be a priority and not merely a choice, the casual attitude of many people is what often makes them laid back towards this necessity. But, like they say, better late than never. So make use of this wake up call to buy health insurance, if you haven't, and hence provide a safety net for yourself and family to tackle skyrocketing medical costs.

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3. Never take your income for granted

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Call it our casual nature or just laid back attitude, but many of us tend to take our income, whether as salaried or self employed, for granted. When the salary keeps getting credited to the account, we often assume that this would continue to happen. This also makes us plan our expenses and lifestyle on the basis of this assumption. That's where we go wrong. The pandemic served as a reality check, hasn't it? Many of us might have faced income disruptions like job loss, pay cut etc. What all this taught us, is to never assume that income is everlasting, and budget our lifestyle to deal with a situation like this. Some ways to do that can be - converting those weekly movies and dinners into monthly ones or those frequent shopping sprees could be trimmed to occasional ones. Because money saved is money earned.

4. Never put all your eggs in one basket

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Another crucial lesson, especially for investors, is to never put all your eggs in one basket, i.e. to maintain a diversified portfolio. Those who fail to diversify and stick to a particular investment vehicle or asset class are the ones who tend to usually suffer in such adverse scenarios. Their investment returns would entirely depend on how that one asset class or investment avenue performed when you needed to redeem the investment. So, it¡¯s better to always spread your investments across different asset classes with varying degrees of risks and returns, so that you can eat the fruits of both minimised risk and maximised returns.

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