As a minimalist and a strong advocate of financial literacy and financial freedom of some kind, I've always been saying to:
- live below your means, don't spend the whole salary, especially on things you won't need or use very rarely.
- pay yourself first, always treat saving as a bill you need to pay at the beginning of a month.
- have an emergency fund, some money for the rainy days, specialists say to have 3- 6 months of your income saved on such a fund. I would say, as much as you can or as much as you feel comfortable with.
- invest the rest of the money you have and may invest, but look at the long term investing.
And here comes the pandemic, something nobody has really thought of, something we read about in history books. Suddenly we are all touched by it, also in financial meaning. Suddenly the whole world of financial freedom, FIRE movement is facing the backlash of the bigger or smaller kind.
It is not only connected with a sudden downtrend and losing our savings but moreover, it is connected with our psychology of finances.
I don't know if you have felt it, but I've noticed I am anxious not because of the lack of emergency funds, but the fact I will definitely have to use some money, if not all, in a period of 1 year, 1 year as I predict based on what some experts say, the pandemic to have a great effect on my income. So, if I am going through such thinking, you too may feel it, that's why I want you to know you are not alone or just ask you how you feel about it. ( you may always want to let me know at my Twitter account @Brygida_Poland)
The 2nd thing - paying myself first- I've decided to continue doing it, even though my original thought was to stop. I've realized though I will benefit from this money sooner or later, so as long as I have my emergency funds and I know my monthly budget, I find savings a part of my budget. Of course, for many, it will be wise to review the sums that you save, everything depends on how you feel about it.
The 3rd point, but also connected with the 2nd one, the part of my savings is allocating some money to mutual funds. I am still going to do that. Why? especially when the market is heading towards depression? Because I am still looking at investing in the long term. I know, I am aware now the market looks really bad, but in a few years the numbers will bounce back, from the investing perspective what is happening now could be just a short downtrend on the investing timeline. Plus, now while investing even small sums, but on a regular basis, we buy stocks/ mutual funds cheaper.
1 thing I do not recommend now to anybody, including myself, is buying individual stocks if we are not specialists. That is why I am saying about mutual funds or ETFs.
From the perspective of mindfulness I know, even in such hard financial times, it is good to keep cool heads, do not jump to fast conclusions, and act on them rapidly. It's good to just keep going with our own financial pace, doing it regularly. Time needs time for changes, let's give it time.
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