The impact of the COVID-19 lockdown has seen many people’s incomes significantly reduce. The uncertainty of how long this situation will last and whether the worst is yet to come is causing huge financial stress for some families. Lessons are being learned the hard way.
Those who have lived life on the edge with no emergency funds and high levels of short-term debt will suffer the most. Living from pay-day to pay-day is possible when incomes are stable or increasing, but a sudden drop in income can be catastrophic. Financial advisers who have long preached the benefits of being prepared for the unexpected can now rightly say “I told you so”.
People who have lived a long time know that the economy has cycles, and every decade or two there is a significant financial shock. The trigger is always different and never predictable. All we know is that good times are always followed by bad times and this time is very bad. However, we also know that bad times are always followed by good times. We just don’t know when the turning point will be or what will trigger it.
After a big economic shock, there is a time of adjustment and transition to a new way of being. Businesses die and new businesses are born. Resources – people and money – shift from the old to the new. The unemployed find employment again. We will all reassess what is really important to us. This all takes time – perhaps several years – until a new equilibrium is reached.
Living through a crisis requires resilience. People need to dig deep within themselves to find the emotional, physical and financial strength to get through to the other side of change. Be flexible, be resourceful. Let go of fear and learn the lessons for next time.