As 2019 came to an end, my Instagram was bombarded with many posts and stories that night.
All of which were friends being thankful for the experiences they had in 2019.
Being hopeful for what’s to come in 2020.
And of course, everyone setting their New Years’ Resolution to start the year right.
But then all hell broke loose and the biggest Black Swan event of all time happened: the COVID-19 Crisis.
In this mere 5 months, this crisis has turned our whole world upside down and we’ve been living with a lot of uncertainty and FEAR.
Having stayed at home for almost 2 months now, it has given me a lot of time to reflect on what has happened so far.
What COVID-19 Has Taught Me About Personal Finance
At first glance, it seems like the takeaways from the pandemic are all negative, what with the panic buying, the deaths, and the lockdown…
“The only real mistake is the one from which we learn nothing” – Henry Ford
Therefore, even after a scary event like COVID-19, it’s always critical to reflect on what had happened.
This way, we can learn from what we did and improve upon it.
As cliche as it sounds, life REALLY is very unpredictable.
And I believe that this crisis has opened our eyes (or mine, at the very least) to how vulnerable we all are.
As well as how almost anything can happen anytime.
Which is why we always have to be prepared!
Thinking back on how COVID-19 has affected my finances and the way I manage my money…
Here are 4 key lessons which, I believe, we can all learn from the COVID-19 pandemic about personal finance.
1. Always Set Aside Emergency Savings
The importance of an emergency fund has never been so obvious to me until now.
Before this, most of us wouldn’t prioritise setting up an emergency fund.
I mean, we’re still young and we’ve got plenty of time to save up for the future.
The extent of how a single pandemic has impacted our economy (and the world’s), has really frightened me.
Even after this whole COVID-19 situation has been put to rest, one thing’s for sure.
It’s extremely crucial to have an emergency fund set up to tide us over any crisis which we might potentially face in the future.
We never know when and how we might lose our livelihoods…
2. Diversify Income Streams and Skillsets
With retrenchment rates at a high, it scares me a little when I think about what the job market will be like when I graduate in 2 years’ time.
What if things don’t get better then?
Or what if ANOTHER Black Swan event hits us?
That’s why I believe it’s extremely important for us to diversify our income streams and skillsets.
By constantly improving and growing our skills.
We create multiple backup plans to fall back on even if one stream of income evaporates or if our primary skillsets are rendered obsolete.
Even now, I have friends who are working as delivery drivers while they look for a job in this current market.
Alternatively, we can make use of this time and our SkillsFuture credits to learn new skills.
Figure out how to turn our hobbies into side hustles.
Or even take this time at home to flip those clothes that have been hiding in your wardrobe for years.
If anything, at least you’re creating different streams of income — and that’s better than nothing.
3. Get Suitable and Sufficient Insurance Coverage
“Funerals aren’t for the dead, they are for the living”
Remember this quote from The Fault in Our Stars?
Now, replace funerals with Insurance and repeat the quote.
Insurance is designed to either protect ourselves or our family members who may depend on us for financial support.
It acts as a financial safety net that either provides compensation for when you get into a personal accident or if you leave this world prematurely (touch wood!).
(Note: there are many different types of insurance which provide different coverage)
Without proper insurance coverage, the resultant financial burden could potentially drain our precious savings.
Or worse, push our family into debt.
In fact, I recently watched a video by a local YouTuber who was hospitalised during this period.
The biggest takeaway here?
Get insurance and be protected!
4. Prepare Your Will and Complete Your Nominations
You may be thinking, “SIAO AH, why need to write my will this early?!”
But the truth is, it’s really never too early to do so.
In the eyes of the law, passing on without a valid will means that your estate will be distributed according to the Intestate Succession Act.
And we would definitely want to make sure that our money goes to the right hands after we pass on, right?
By writing a will, it’ll save your beneficiaries a lot of time and from having to go through tonnes of administrative paperwork.
So start by writing a will today, and you can leave this world (touch wood!) knowing that your loved ones are taken care of.
Thoughts On The COVID-19 Crisis
This pandemic has shown us the importance of financial security — especially when we meet with unexpected circumstances and situations.
I hope that we can all take this COVID-19 pandemic as a wake-up call and remember to cherish the important things in life.
(Be right back. I need to tell my loved ones how much I love them again…)
Even with the end of the Circuit Breaker in sight, we’re not going back to the usual lives we once had.
There will be a new form of ‘normalcy’.
And we’ll possibly have to learn to live with the virus.
But beyond all the ‘what ifs’, our futures are still in our hands.
And we should prepare for it by protecting ourselves and our loved ones, financially and physically (by staying healthy!).
Even more so seeing that there’s a recession just looming ahead.
Let’s all stay strong together!