Updated: Sep 2, 2020
With countless opinions and theories regarding COVID-19 circulating, conversations around the pandemic can get stressful quickly. Regardless of your personal sentiments, current circumstances WILL have an effect on the financial mentality of the children experiencing them, especially if your family has encountered prolonged job loss.
Just as the Great Depression shaped The Silent Generation’s frugal spending habits, COVID -19 will shape our childrens’ relationship with money. During this time, parents have the opportunity to ensure that those financial habits are molded for the better.
To help guide the conversation with your kids, we crafted a three part mini-series to highlight opportunity during a time of uncertainty.
Corona Virus | An Unwelcome Catalyst For Change
Although it seems there is little we as a society agree on at this juncture, it’s safe to say this Pandemic really put a damper on the new decade for everyone. We went from clinking champagne glasses Leonardo DiCaprio-Gatsby style as 2020 rolled in, to obsessively purchasing overwhelming quantities of household paper products from the local Costco in a state of not-so-controlled panic.
For many, we’ve lost time with friends, foregone momentous life events, added full time teacher to our resumes, and now, as if the pain was not severe enough, suffer from chronic mask-ne. Cute.
While traumatic images and messages from the media bombard our news feeds, the Common Cents crew would like to highlight several of the positive opportunities COVID-19 presents with regards to personal finance and how parents can use these hardships as teaching moments.
Perhaps. This Pandemic may be the catalyst many Americans need to change the way we relate, think and learn about money (for the better).
Prior to the financial effects of COVID-19, an alarming number of Americans were living paycheck to paycheck with no emergency fund. The numbers were actually quite alarming. An August 2019 survey from Charles Schwab found 54% of U.S. adults were mired in this hand to mouth cycle. Meaning, if they went one week without a paycheck, they did not have any reserve cash resources to cover their necessary bills. Yikes.
Unsurprisingly, the impact of mass unemployment exacerbated these numbers, and many have found themselves in dire financial scenarios. It’s painful. There’s no other way to spin it.
The takeaway? Most of us were (and still are) ill-prepared for one of life’s unexpected sucker punches. Despite our best efforts as parents, the impact of that financial punch reverberates and is felt by our children.
No one enjoys preparing for a rainy day (except maybe for the occasional zombie apocalypse dooms dayer), especially when times are good and the sun is shining. Still, it seems Lizzo got it right, the truth hurts. This seasons’ truth caught us living irresponsibly. Now many of us are struggling. Although discipline is uncomfortable, it hurts a lot less than a financial sucker punch. Pick your poison.
For countless families, COVID-19 has illustrated that paychecks are not infinite and there is no such thing as job security. Let’s reflect. If you lost your job tomorrow, could you survive on savings for three, four or six months? If not, consider modifying your spending behavior to create a financial situation your kids can be proud of.
Allow this financial hardship to be an opportunity to prioritize savings and educate your kids about the difference between needs versus wants and the danger of superfluous spending.
Talk through your purchasing decisions with your kids. When you get distracted by the items on the end-cap at Target, verbalize your thought process to your children.
I’d really like this [insert item], but we really don’t need it. It would just be nice to have.
Saying it aloud will not only enlighten your kids, it will encourage you to be disciplined. They are watching after all. The change begins with you. Are you up for it?
Part two of our Pandemic Series goes live next week. See you soon!
Ca$hing in on change,
The Common Cents Crew
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