The financial lessons from lockdown have been huge. Most people's finances are on autopilot, and not always for the good. The Covid era has provided great learnings for anyone willing to listen to them.
One of the biggest lessons for many, says Tom Hartmann, managing editor at the Commission for Financial Capability (CFFC), was how resourceful we can be when forced. When people couldn't buy what they needed they learned to make do. Hartmann cites the example of people making DIY desks. One of my friends couldn't face the supermarket queue, Googled and found that conditioner was as good as if not better than shaving cream.
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For me, the biggest lesson was that the world can go truly mad overnight and we're all vulnerable. Imagine being one of the hundreds of people employed by Bauer Media, which simply shut The Listener, Metro, North & South and even the NZ Women's Weekly overnight. The media might not be a growth industry but few would have imagined many of New Zealand's oldest titles would be in danger of vanishing. I'm sure pilots and other airline staff couldn't have ever imagined long-haul flights shutting down en-masse.
Some of the lessons going forward should be viewed as a positive:
Make hay in the good times
What can and did happen, reminds people to pay down debt, build up savings and just be wary of taking on loans for non-essential spending.
An emergency fund is essential
Too many people with what seemed like good jobs found themselves without an income or a temporary reduction for the first time in their lives. It's a disaster if you're already up to your neck in debt and have less than two weeks savings as many, even high earning, people do. If you felt the need for an emergency fund during lockdown, now's the time to put it in place, says Hartmann.
We learned more about our spending
I've written in recent weeks how Kiwis didn't understand how much they spent on food, until they had to buy all of it from the supermarket. We learned as well that when we could spend on anything we had time to reflect on what were real needs versus wants. Some of the best things in life such as exercise turned out to be free.
Markets bounce back
I winced a little at people who'd switched their KiwiSaver from growth to a conservative or cash fund AFTER the markets dive-bombed. They locked their losses in at the very bottom, sometimes thinking it was the smart thing to do. Anyone who rode out March and April in growth or balanced saw their KiwiSaver funds bounce back.
The government does have pockets
I have friends in countries such as Brazil where if you don't work you don't earn. No wage subsidy or benefits. Our wage subsidy supported more than one million people through a very dark time financially. The flip side of that is that many of those who find themselves on benefits for the first time will be shocked that the benefit, and wage subsidies are meagre.
It's kind to spend local and support NZ businesses
Lockdown has hit home more than words could ever do about how important it is to support local businesses. It keeps locals in work and the economy ticking over.
What we had in lockdown was time, which is a luxury that we don't usually get, says Hartmann. "We are very much creatures of routine. So much of our finances are on rinse and repeat and the lockdown was a blessing in disguise and a huge opportunity to design what is our new normal going forward."
If taken on board, the learnings from lockdown can make us and our finances more resilient in the future. If you can use the pandemic to jump start better financial habits, knowledge and decision-making, you can take a positive from it. There always is a next time when it comes to financial crashes and recessions.