While the economic fall out due to the pandemic is inevitable, its effects on some families could have been cushioned by a combination of foresight and frugal spending.
Financial experts advise setting aside 15% to 20% of income for savings. This proportion of the income should go to building up an emergency fund that is good for six to nine months of expenses. This emergency fund should only be touched in cases of emergency: a medical procedure, unexpected but critical car and household repair, and unemployment or bankruptcy. But how many of us actually prepare for these emergencies? How many of us consistently save money and deposit it to an emergency fund?
In the pre-pandemic scenario, a lot of ordinary people, with ordinary—if not minimum— income, spend a big portion of their money on “wants” like expensive coffee, fine dining restaurant meals, upgraded gadgets and other trappings of the good life. Women pay astronomical amounts on bags, shoes and make-up. Overseas workers squander hard-earned money on gifts and treats for people back home. People max their credit cards to fulfill their travel goals and go on vacations they can hardly afford. Gullible people postpone their savings for the month and take advantage of “mall sales” (which happen almost every month) — and buy a second giant TV, or other things that clever sales staff offer them. So many people just don’t know how to manage their money.
Some people justify their wanton spending with YOLO mentality. “You only live once”—they say. This hedonistic philosophy is fine on two grounds—if we die young, and if life were a bed of roses all the time. But we also grow old, and tragedies do happen from time to time.
Now, we have a global pandemic. A disease that sucks the breath out of our bodies, and disable and kill us. Hundreds of thousands have lost their lives. Countless businesses have closed. Millions of people are now unemployed. Governments are scrambling for resources to bring aid to their citizens
Many of us, who—before the pandemic —were living the good life, are now struggling. We suddenly found ourselves with little money or none at all. Three months into lock downs and quarantines, we are now scrimping and barely surviving. Our bank accounts have gone dry, and many of us—formerly middle class — are now poor. Wallets are now empty, and we’re struggling to buy food, safety masks and sanitizers. We are stressed and depressed over the scarcity and the uncertainty.
Tough times should teach us tough lessons. People should learn from this pandemic. We should learn the habit of saving a portion of our income, and building an emergency fund. Instant gratification of wants is a risky habit that should be tamed. If it’s necessary for your sanity, about 10 percent of your income can be spent on little self-rewards. But more than that would be courting more disaster in times of disaster. As history tells us, pandemics and disasters are an inevitable part of human existence. While we cannot avoid them, we can lessen the damaging impact they will have on our lives. We can prepare.