Written by Amanda Cassar
If the upheaval due to Covid in the past twelve months has shown us anything, it’s that most of us, did not have a plan in place for a pandemic. And seriously, most of us weren’t alive for the last Spanish flu pandemic of 1918, so the lessons were largely relegated to the past, if not completely forgotten.
And it’s really been ‘the luck of the draw’ as to whether we had a job or not to go into following mass local and global lockdowns. Pilots are now manning their local BWS and tourism and hospitality workers rely on JobKeeper to see them through. Farmers watch their crops rot on the trees and vines as no one is available, or wants, to pick the fruit.
So, what are the financial lessons we can take away from the ‘new world’ that we’re now facing… and may have to for some years?
Have some Savings
For those who live week to week, one of the hardest things has been having no backstop to be able to rely on.
But a time of forced inactivity can also mean a time to reflect. Being obligated to make changes can also make new habits easier to adopt than they may have been in the past.
Suddenly, takeout and restaurant meals weren’t available, gym memberships remained unused and suspended, and most discretionary spending ceased. For others, an increase in anxiety led to online gambling, an uptake of subscription services and overflowing online shopping carts.
No spending has meant reserves have been forced, and Finder1 tells us that savings jumped 31% from January to June in 2020. It’s worth taking stock and evaluating our own circumstances to see we fared, based on our employment, or lack of, and spending required.
Whether you had money saved for a holiday, kept a ‘rainy day’ or emergency fund or stashed money in your offset account, you likely were in a better position at the start to take stock of your situation and work out ‘what next.’ For some, this will be the big lesson to take away.
The good old-fashioned habits our grandparents had of ‘tightening the belt’ and living within our means are definitely making a comeback.
For others, the frugal way of life is completely new, but check out those who have embraced it for ideas on how to not only survive, but thrive, without all the ‘stuff’ we’ve been told we need.
Blogs are popping up everywhere with frugal tips learned from the Great Depression to how to save and even become more self-sufficient, whether you’re an apartment dweller or have land enough for your own veggie garden. Slow living trends are replacing the fast-paced life for some, yet others say they’ve never worked harder. Hopefully at some stage, you’ll also get to push the pause button and reflect, if you haven’t already.
Are you loving the changes and opportunities that have opened up or terrified, or is life relatively unchanged for you?
With the rise of everything moving online, the increase of Artificial Intelligence, along with robotic and tech trends, it makes sense that financial services will also follow suit.
The banking industry already seems to be focusing on innovation with a future that’s likely to be driven more and more by tech.
So, if there’s no financial apps on your phone already; not just to manage the bills and check your balance, but also help track and manage your dollars, there likely will be in future.
Some have already ditched the traditional wallet altogether and pay for everything via their phone or wearable tech; others are still struggling to keep up with EFTPOS and the possible death of cash. Some believe the ‘cashless society’ isn’t too far off, whilst others see this outcome as highly unlikely, and a very long way off yet.
FinTech is now a booming enterprise and the rise of artificial intelligence will mean more and more digital transformation and collaborations in the coming years. It’s very much a ‘watch this space’ area to see what new and exciting breakthroughs are ahead.
In the past, it’s unlikely that anyone would have accused the banks of being agile technology companies; but customer preferences, lifestyle changes forced upon us and the shifting demographics of the world may mean that this is also on the cards.
So, with all the changes that have happened, are happening or likely to happen, it’s never a bad idea to check in with our own finances. Making sure we know our own numbers is still the wisest way to stay on top of what’s going on in our own sphere. It also provides us with options. We can understand whether paying down debt is advisable, stashing more money is a good idea, putting aside for retirement is on the cards, or if we’re struggling to live within our means and drowning in debt.
If you feel that analyzing it all is a bit beyond you, then approach a friend or family member who you believe to have their financial act together for help can be a great start. You may just need that accountability buddy to keep you on track. Or you may need more substantial assistance, the financial counsellor if we’re struggling or a financial adviser if we need strategies to help take us to the next level.
It’s going to be an interesting ride to continue watching what’s new in the world of finance. Just make sure you’ve got a handle on your own affairs first.
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Great insights, Amanda Cassar.
We can certainly all do with some pointers on how to deal with this ‘new world’.
With all that has happened over the last 12 months we all need as much help as possible, I think