Why Saving is the Smartest Thing To Do In A Pandemic
Updated: Jul 27, 2020
The world is an uncertain place. Some days it can be even more uncertain than others. Right now is one of those times. Uncertainty can cause fear and even panic. When people panic, they can make choices that are less than optimal. But we can fight back against these urges. We do not have to give in to the madness of crowds. One of the best ways to feel a bit more in control and rational is by saving money. Money can give us choices when we feel like are out of control. At the very least, it can help us feel a little less anxiety about one very important element of our lives.
As places and activities shut down around us in order to keep us safe, this can present us with a multifaceted opportunity. Less things to do gives us less things to spend our money on. If you are wanting to avoid malls, use this as a chance to miss your favorite stores for now. Our behavior is often dictated by our environment, and shopping is definitely one of those behaviors. Covid-19 has certainly changed our environments, and for those of us with out of control spending, this can be a great opportunity to change our behavior to the more frugal side. Instead of shopping, read a book. Listen to a podcast. Catch up on that Netflix show you've been meaning to see. Cook for your family instead of going out to eat. Take a walk around the neighborhood (even if you don't talk to anyone or get within 2 meters of others). Now that the parks are back open, visit one and go for a run. All of these behaviors will help you develop good habits whether there's a pandemic or not (well, except for Netflix, but, hey, a little distraction won't hurt you).
All of these free activities can not only help you now, but they can help you develop lasting habits that will make you happier, healthier and wealthier down the road. By breaking your shopping habit now, you can realize that happiness doesn't have to come from swiping your credit card. Lasting happiness comes from pursuing your purpose, learning, exercising, appreciating our loved ones, and enjoying art.
Saving money right now also allows you more choices later on, it can give you a backup plan in case you need one. For me, I'm supposed to move to China in July to teach there for the next two years. All signs point to that still happening, as of today, but a little niggling part of my mind is worried that with all this uncertainty, I won't have that opportunity. So instead, I'm saving my cash. I already have enough set aside to live off for 1-3 years, depending on where I spend my time. I won't have to sell any of my investments while they have lost value due to the market's volatility lately. I don't know for sure that this will fix all my problems or the problems of the world, but it sure helps me sleep better at night knowing that I'll be OK for the foreseeable future. Saving your money right now can give you that same sort of confidence to face that uncertainty.
The other great reason to save money right now is to take advantage of investment opportunities later. Stocks, bonds, and real estate have been priced quite high in many markets around the world. After a panic sell off, if you have a large cash position, you can be in a great place to invest when things are cheaper. As the old expression goes, "When there's blood on the streets, buy property." People who survived the last crash of 2008 are those who bought when the market was low and gained a huge amount in those following years.
While it's important to be informed of this rapidly developing situation, obsessing over it will only increase your anxieties. When you're anxious, that's where advertisers want you, because you're not thinking clearly or logically. You're more likely to buy their products, even if you don't need it or can't really afford it. That's another reason to try to find activities that keep you from focusing exclusively on the dangers of an uncertain world. Try not to forget about the things in your life you should be grateful for. Your friends and family are probably still here. Food is still delicious. The sky is blue. Babies and puppies exist. Remembering these things can keep you from the darkness that can cause you to spend too much money in retail therapy.
Saving more money now can benefit us in multiple ways. Hunker down. Stay safe. Keep your money.
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