5 Obvious Financial Lessons Covid Taught Everyone
You might have read countless articles, watched videos about the economic impact of the coronavirus pandemic. But this article focuses on five less obvious financial lessons that the pandemic taught.
Let’s get started:
1. Your spending on education may be too much
But there is little difference between private and public education. What difference does it make on the children’s academic performance? Does buying expensive books, tablets/gadgets, sending your child in AC buses and others really make a difference? Remember, just buying and storing the books won’t give your child a more intellectually enriching environment.
The conclusion is clear: You can’t raise children with money alone. You need to become the kind of person who values learning and shares it with them. If you don’t read, they won’t. If you say you care about education but don’t show it in your daily life, they will follow your example, not your words. It’s not bad in itself to pay for tuition, but it’s not worth it, if you do it believing blindly that your children will succeed just by going to the tuition. Remember expensive private school prevents you from paying debts, saving and contributing to retirement.
During the pandemic many have noticed something peculiar in their children’s online classes – that actual education is only a small part of school. It is something that those who practice education at home (the so-called home schoolers) already knew. They cover the curriculum for the day in just one hour. This means that of the six hours your child spends in school, only one is needed for academic knowledge. The rest of his day is a mix of babysitting, indoctrination, socialization, and training to follow instructions. Although their benefits on overall grooming of your child cannot be neglected. But what about real academic knowledge?
Thus, many parents become desperate each day as they witness the two-hour online class and its results: the roll call, the stripes to the notebook in red, the title in green, the text in black, and the underlining in blue, all to learn only that oviparous animals lay their own egg. And then there are two more hours of making the child a model of a little egg in hatching because the teacher seems not to know that at the age of four years the child cannot yet do it by himself. So the pandemic is really the best time to reconsider that monumental tuition payment.
2. Distance from home to work or school does matter
During the pandemic many people started exercising or playing with their children either at home or on the street. While it’s true that many people have extra time because they lost their jobs, there are also people who are finding that their quality of life is much better, if they don’t have to spend one, two or three hours a day on transportation.
Also, they may see their wallets bulge considerably as they avoid spending on gas or fares. We tend to get caught up in the routine, but we can take advantage of the contingency to see if we can make a better living by putting a stop to unhealthy commuting times. Of course, it’s not easy or possible for everyone: sell the house, or rent a smaller space near work, or find another job or school closer to home. But now that you’re seeing the benefits, do you think you can at least create a medium-term plan to change things? Maybe just remember this time to take advantage of an opportunity to live and work nearby if it comes up? Your health and wallet will appreciate the effort.
3. We spend a lot to be seen by others
The fashion industry is in crisis because of the pandemic. Many have stopped buying clothes, as they don’t feel it is necessary since they are working from home. Have you noticed changes in your spending patterns? Do you think you spend too much to impress others? Although there are professions that require a good image such as that of a lawyer or financial industry.
But it’s also true that there are many items, small like accessories or big like cars, that we choose with the sole objective of impressing or transmitting a certain social status. Although this is not bad in itself, it does harm you if underneath the shiny appearance your finances are in the red, you get sleepless nights because of debts, your days are just work, work and work to pay the bills, no free time, no savings, etc.
4. Going out is expensive
With the tighter measures of the pandemic, many people’s wallets began to get fatter and fatter. Not being able to go out, they could not spend money to eat out, nor did they feel like buying things from store shelves. Many expensive outings were replaced by walks through the park or their society.
Did you feel like you were drowning at home? Maybe so, but maybe you also noticed that you enjoyed an outing much more after being home for a while. What we do all the time stops producing the same pleasure, because we get used to it. So it is vital to consider it in your plans to achieve a balance between your needs and enjoyment in the present and your financial health in the future.
5. Good and Bad Cascade
Imagine that you become very good at just one thing, for example, you become an expert at telling jokes. You start giving shows in small places and so you spend some time practicing and improving. Then you show up in bigger venues, and then you upload videos to the Internet that go viral and suddenly more opportunities come knocking at your door than you can take. The success is exponential, not linear. It is similar to simple and compound interest.
That’s why a contingency like Covid hits people who are already financially vulnerable and makes cyber-business owners millionaires. It’s a cycle that is getting exponentially worse, and which perhaps begins with something small. Let’s say that between paying tuition, car expenses (for a two-hour commute to work), branded clothes and trips with friends, you don’t have a penny left to save. Since you don’t have any savings, you take out loans, and if you can’t pay back the loans, the interest is inflated, and if you can’t afford the interest, they take away your car.
Not to be an alarmist, but it’s always important to know that improving or worsening your situation in life can be exponential. Working in one area of your life, however small it may seem, can have incredible repercussions. There are key areas, such as finance, that with a little effort can improve almost every other aspect of your existence.
Hi, I am Nikesh Mehta owner and writer of this site.
I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.