Published in: Banks | March 19, 2020
Silver Lining: Social Distancing Due to the Coronavirus Pandemic Could Help Some Americans Save Money
By: Maurie Backman
Millions of Americans are suddenly homebound, and while that's not a good thing, it could actually help their finances.
COVID-19 has closed down schools, businesses, and communities across the country and the world. And with experts warning that it could be months before social distancing serves its intended purposes, a large number of people may be stuck at home for much longer than they'd like.
That's obviously not good news. Too much isolation can lead to feelings of depression, and for some people, working from home long-term isn't feasible. In fact, for some, it's not feasible even in the short term. Also, the longer that small businesses are forced to stay closed, whether due to government mandates or a lack of foot traffic, the greater the chances they'll never manage to reopen. But if there's one silver lining to be found in all of this, it's that some people do have an opportunity to boost their savings accounts at a time when having more money in the bank could be a lifeline.
How social distancing can save you money
Many of us routinely spend money on restaurant meals, happy hours, movies, live concerts, and other types of entertainment. We also spend money on grooming so we look nice when we see our friends, and on clothing and footwear to make a good impression.
Like it or not, in-person socializing is pretty much off the table right now. If you're used to spending a fair amount of money in this area -- and you're still collecting your regular paycheck -- you actually have a solid opportunity to stick that cash into savings instead. This is an especially important move if you don't already have a healthy emergency fund -- one with enough money to cover at least three months' worth of essential living expenses.
Another thing: Working from home means you no longer have to pay to commute, and being homebound means you'll spend less to fuel up your car in general.
Again, these are not good things in theory, but if you're the type of person who tries to see the positive in bad situations, it pays to do so -- not only for the sake of your morale, but also for your long-term financial situation.
Of course, the problem with being isolated at home is that it can be boring, so you may be tempted to spend more money on things you normally wouldn't buy, like video games, for entertainment. You may also be tempted to shop out of boredom, even if the items you buy, like clothing, aren't necessary right now. But if you make a concerted effort to not spend money needlessly and instead bank some savings, you'll be in a much stronger position than a lot of people once this ordeal comes to an end. (Tip: A good way to curb shopping impulses is to avoid storing your credit card details on your phone, laptop, or tablet.)
It's important to realize that we don't know whether the current crisis will spark a full-blown recession. But if it does, it means your employment status could be compromised in the future, even if it's stable today. And that's all the more reason to pad your savings while you can.
Right now, it's hard to see the light at the end of what could be a very long tunnel. But if you're in the fortunate position of keeping your paycheck during these turbulent times, take the opportunity to boost your savings. That way you'll be better prepared to deal with the aftermath of this crisis, or any other personal financial crises that come your way.
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