Can you believe it’s been six months since the coronavirus turned our world upside down? Who would have thought, at the beginning of this year, that we would become accustomed to the concept of quarantining, or that a phrase like “Do you have your mask?” would become a part of our everyday nomenclature? In some ways, all of this feels like it happened just yesterday; in others, March feels like it was a decade ago.
So, to commemorate this ‘anniversary,’ we decided it would be worthwhile to take a look back over these last six months. Because even though our lives have changed (and who knows for how long) we always like to find a silver lining, when possible. And if we can all learn something from this pandemic – and become smarter, more thoughtful, more deliberate with our money – then that would be something, wouldn’t it? A small victory amongst the seemingly endless battle we’re facing.
Always expect the unexpected: As people who talk and write about money and finances on a daily basis, we cannot count the number of times we’ve said, “And make sure you always have an emergency fund.” Quite honestly, we wouldn’t be surprised if we received some eyerolls in response. Because we get it. Stashing away cash to cover three to six months’ worth of expenses can be a monumental challenge. But this moment we’re in – right now – is the perfect example as to why this advice is so paramount. You truly never know what’s coming around the corner. Whether it’s a broken air conditioner, shot brakes on your car, or a global pandemic, things happen. A job can be lost in an instant. So please, if you don’t yet have a sufficiently funded emergency fund, make it a priority. And keep it liquid in either a savings account or money market account. You want it easily accessible and without penalty.
Reevaluate your ‘needs:’ Over the last six months, have your spending habits changed? Ours most certainly have. We’ve both found we’re spending a lot more at the grocery store since our families are cooking more at home; but on the flip side, we’re spending much less on gas. And of course, while there’s the occasional online purchase, we haven’t found ourselves spending as much on non-essentials. There just hasn’t been a reason to. So, we encourage you to take a look at your own spending. In what areas have you spent more? Less? Are there things that you always used to think were ‘needs’ that you actually haven’t purchased recently? Use these last six months as an opportunity to reevaluate your financial priorities – and hopefully, even once things are eventually back to normal, you can continue to stay true to this fresh perspective.
Market timing is a losing proposition: At times this year, it’s felt as if the stock market is attached to a yo-yo. Remember the big market decline back in February? It was the fastest 30 percent drop in the history of the S&P 500 (an index comprised of the 500 largest U.S. companies). Then the question became, “How long will this last?” Because, typically, bear markets (defined as a drop of at least 20 percent from recent highs) last about 300 days. But then we were in for another surprise: This bear market lasted a mere 33 days, the shortest in history. And now, we’re close once again to record highs, even though we’re still in an economic recession.
This goes to show that no one truly knows what’s going to happen with the stock market in the short term. While we can all take our best educated guess, there are no hard and set rules. Because even if you had ‘gotten out’ at the ‘right’ time, you also needed to ‘get back in’ at the ‘right’ time to actually take advantage of all the subsequent gains – and who would have thought that the market bottom would have been March 23rd? At this point, most states hadn’t even gone into lockdown yet. So, instead, stay focused on the long term. Because that is something we know about the stock market: Over the course of time, it goes up. Remember, it’s not a matter of timing the market – it’s a matter of time in the market.
Here is the Simply Money Point, if you’re in a financial position to do so, we hope you take these three lessons to heart. And here’s hoping that, six months from now, there will be even more progress towards normalcy