The COVID pandemic has been financially devastating for many Americans, writes veteran financial journalist Kimberly Lankford in a recent article for GOBankingRates.com.
But at the same time, the disruptions caused by the COVID pandemic have taught us valuable lessons about managing our money and professional lives better in the future.
Emergency reserves and other protections
Kim interviewed Mari to discuss key money lessons from the pandemic. Keeping an adequate emergency reserve fund was one of the most important lessons from COVID, as many households and small businesses found themselves short of liquid resources during the initial COVID lockdowns.
Far too many Americans learned first-hand why it’s important to protect themselves and their families by maintaining life and disability insurance coverage on family breadwinners. Likewise, many people who had been putting off updating basic estate planning documents scrambled to meet with an estate-planning attorney during the pandemic to put their legal documents in place, like a Durable Power of Attorney, medical directive, or Trust.
Spending less, saving more
There were also some positive teachings from the pandemic. Being at home and living with the lockdown restrictions gave us all a clearer idea of our budget “needs” and “wants,” and helped us pare back our discretionary spending.
“People saved so much money during COVID because they were not going out as much, not traveling as much, not buying clothes,” said Mari in the interview with Kim. The pandemic made people ask themselves what they really needed to be happy. Often, the answer was “less.”
While we all want our lives to return to normal, many of us have gained valuable insights into how saving and investing more, and perhaps spending less, can improve our quality of life.
Kim cites research from a Charles Schwab survey confirming that to be the case. Forty percent of Americans surveyed said “they are more likely to be saving more in general compared to before the pandemic outbreak,” with 24% saying they are now more likely to have a financial plan.
The Takeaway: Don’t wait for the next crisis to get basic elements of your financial plan in place. Build up your emergency reserve fund, protect your family with proper estate planning and insurance coverage, and make sure you are saving 10-15% of income to cover your future retirement needs. For more money insights from the pandemic, read Kim’s full article here.
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