IT IS EASIER TO SPEND LESS AT THE MOMENT
Simple. We have very little to do, and therefore we’re naturally spending less. I would normally go out to restaurants, events, travel etc. While currently, the biggest expenditure I’ve had other than my usual rent & food costs has been buying my girlfriend a Nintendo Switch so we can play the new Animal Crossing together to keep ourselves entertained during down time.
I am in a fortunate position where at the current moment in time, I still have a well paying job. I am still working, and if anything, we’ve been more busy recently. However, there are many people who aren’t as lucky as me, and there are people who may not have a job this time next month.
This is why it is important that in this time of being ‘easy’ to spend less, you take heed and do so. I know it is easy to go online shopping when you’re bored at the weekend, but trust me, every little helps if you do find yourself in a position where you’re let go from your job.
Thankfully in the UK the government is putting in some good policies to protect job losses – However this all depends on how long this goes on for. If the effects of Covid-19 continue late into 2020, we’re going to likely see governments reducing their aid packages in an attempt to minimise economic breakage post-crisis.
If you’ve still got your job, start putting money aside. Don’t be afraid of the bank – Just keep as much money to the side as possible right now. Unless you have huge disposable income (I’ll cover that next), then you want to focus on liquidity and flexibility of solid cash. It is unlikely you’re in a position where you need to worry about losing your money from the bank if they go under. Your average person like you & I do not keep enough liquid cash in a bank account to worry about this, and we definitely do not want a repeat of 2008 where people worrying about this caused bank runs throughout the world.
TAKING ADVANTAGE OF INVESTMENTS
Are you in a position where you have large disposable income each month? Well then, I would be taking advantage of the drop in the market to get your foot in the door.
By “large disposable income”, I would say if you’re earning over £40k per year, and saving over 50% of your salary, I would start putting £500 per month into an investment of some sort. You can adjust this number based on your income, and how comfortable you are with investing.
WARNING: There is a possibility the market could be in a downturn for a prolongued period of time, and it could go down further. DO NOT invest if you are not comfortable with seeing your gains in negative figures for now
At the current moment in time, I am trying to put £1,000 into my S&P500 ETF each month. I am currently using Degiro for all my investments, purely because the ETF has no fees. I am limited in what I can invest in due to my job, however, I can utilise ETFs. If you are limited in your investment knowledge/experience then an ETF can be a great route to go down. I would NOT recommend investing in individual stocks right now, unless you really know what you’re doing and have plenty of money to risk.
There is a term thrown around in the aftermath of recessions & depressions – “The Rich Get Richer, While The Poor Get Poorer”. While the sentiment is true, you definitely don’t need to be “rich” to get richer in times like these. You just need to be calculated and keep your emotions in check. I know my investments are in the red for 2020. By how much? I don’t know, and I don’t care. I will still put money in, as I know the ETF I am purchasing is at a discounted rate currently, and in 20-30 years time, I am going to be thankful for it.
Imagine this. We live in a world where if someone told you your favourite shop had a 50% sale on, you’d run straight there and buy items you would have never bought normally. Yet, 10 years later, whatever it is you bought is most likely worthless. However, the stock market is currently having a “sale”, and you’re not taking advantage! Difference being, the stock market has historical evidence of rocketing up in value after economic downturns.
Make sure you’re making the right financial decisions for your future!
JUST IN CASE I LOSE MY JOB
Everyone is at risk of losing their job currently, and very few professions are safe. Unless you’re an essential worker, then you should be having a defensive mindset right now. Your chances of losing your job may be incredibly small, but it is better to be prepared, than think that it won’t impact you, and regret it down the line.
Spend a little less, save a little more, and invest. Sit tight, and ride it out. We’re all going to get through this together.
I work in an industry which is primarily impacted by the ups and downs of the stock market, which is obviously highly irregular and highly irrational right now. Nobody really knows which way it is going to go, and we’ve just got to hope the stock market doesn’t bite us in the a** in the coming months.
Because of the relative irregularity in my industry at the moment, I’m obviously somewhat worried about the close future of my employment. More so, I’m worried about my re-employment if I do find myself without a job. I live in an area where there are plenty of finance roles available, however, this isn’t an environment which is beneficial to interviewing, job seeking, and employment.
So, my defensive status right now is to be in a financial position where if the worst were to happen, I can comfortably ride the wave out. I’m not going to find myself struggling to pay rent the first month I am without employment. Thankfully I am in a position where I can probably cover my normal monthly expenses for about 12-16 months. Hopefully the impact of Coronavirus won’t last this long, but who knows. That’s the scary part of all this, nobody really knows what the aftermath of this is going to be.