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  • Fri, 21, Aug, 2020 - 5:00:AM

Managing money in a pandemic: personal finance in the time of CoVID-19

As the CoVID-19 unfolded across the world, media headlines featured some pretty bleak verbs with regards to world economies (plunge, free-fall, shrink etc). Understandably, these unprecedented times are a cause for massive concern, especially as Auckland returns to level 3 and the rest of the country to level 2. Though there is little individuals can do to significantly alter the course of our national economy (other than contributing to the collective effort to stamp CoVID out as quickly as possible by social-distancing, wearing masks, and following the alert levels, obviously), there are some things you can do to take back some control in these turbulent times:


1. Acknowledge your money anxiety

We all felt the impact of financial insecurity on our mental health – some more than others. Our team of five million is small enough that, if not affected ourselves, we all know someone who has been affected directly or indirectly by unemployment or by furloughs. Unfortunately, young people and women in particular have borne the brunt of our country’s financial challenges.

I’m extremely lucky that my job is considered essential. But I still had worries around having a tiny emergency fund, a >$100,000 student loan and the potential of needing to support family if one or more members lost their jobs/got sick. It’s a generally stressful time, so take the time to acknowledge any money anxiety that is bubbling up right now. And if/when you need more social or professional supports for your mental health, be kind to yourself and reach out for help.

 

2. Don’t make any rash decisions

Fear can fuel some pretty hot-headed decision-making (the quantity of facemasks I ordered using my credit card as a kneejerk reflex on the day our Prime Minister announced Auckland was going to level 3 are a testament to this). But now is not the time to make impulse decisions about your personal finances (savings, KiwiSaver, investments etc), or make rash purchases (#preparednotscared).

If you haven’t already, take the time to learn about the basics of personal finance and make both a short-term survival plan and a long-term growth plan of your financial goals - and map out how to reach them. If you’re a bit lost as to where to start, start with building up an emergency fund that could cover 3 months of expenses should you become unemployed/unable to work, and read about the 50/20/30 rule popularised by US senator Elizabeth Warren.

 

3. Minimise your expenses

When it feels like the world is on fire and there’s no visible end to the pandemic, it’s easy to feel like feeding your budget to the raccoons. Jane Wrightson head of the Commission for Financial Capability and the Retirement Commissioner affirmed on RNZ that though many older Kiwis were shocked by CoVID-19 into reflecting on their personal finances, younger New Zealanders actually took more with a “spend-for-today” mentality and increased their spending (the increased amount of time at home and easy access to online shopping probably didn’t help).

Last lockdown, I was surprised by how much money I spent on non-essentials in the pre-CoVID19 era. I cancelled a gym membership and Apple Music subscription, ate more at home, didn’t (couldn’t) shop at brick-and- mortar stores… Turns out I didn’t need any of those things, really. I exercised more outdoors, listened to music on free platforms, and managed to meet my daily nutritional requirements (though I really, really missed eating out).

If you already have a pretty tight budget and you’re purchasing essentials only, then this may not apply. But people of all income ranges struggle with over-spending, and the best way to figure out if you do too is to start closely tracking your spending.

TAGGED IN

  • Money /
  • personal finance /
  • Savings /
  • investing /
  • COVID19 /
  • Anxiety /
  • Budgeting /
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