Pandemics and economic downturns are known to bring negative results, hardships, and struggles in all aspects of life.
We all dread them but know they are bound to happen eventually.
They tend to discriminate as well.
We aren’t even halfway through COVID and researchers a.k.a CNN is predicting that more than a year from now (December 2021) life will officially get back to normal.
Who’s excited for 365 more days of Zoom fatigue?
While most are struggling and beating themselves to death for their regrets pre-COVID today, this is the greatest time for those who budgeted, saved and thought a little harder when everyone else was living in the present.
It’s always a good time to reevaluate your financial goals, health, and where you stand in terms of your wealth, but especially now when you have the option of binge-watching Tiger King or your investments, only one of them is better for you in the long run.
Regardless of how many times we are told that education is our most vital investment and there is an opportunity cost with everything, it is completely understandable that we need to enjoy life too.
Why plan for it and not be a part of it?
This is where people struggle the most, according to my advisor of course.
The most important thing in doing all of this is to stop comparing.
How does that have to do with anything?
Isn’t that a social media problem?
We judge and subconsciously compare one another because we enjoy putting ourselves down.
Yes, we really do.
As selfish, narcissistic, and picky human beings as we are, we love to be our worst critic.
If you see someone driving a Lambo versus a Honda, there will be assumptions straight to wealth, and unless you are educated about what that actually means, you will continue to assume that tangible items mean that you are wealthier.
Wealthy has taken on a whole new meaning these days.
Why do Silicon Valley billionaires dress like their homeless and wealthy families hide their belongings on public transit?
Becuase they could care less about how others perceive them.
Personally, I always try to downplay myself becuase
- If I do end up showing off, my privacy and security will be threatened
- I have nothing to prove
When I see someone flaunting their wealth, it proves to me that they are so insecure they cannot stand wearing simple Old Navy New Balance sneakers in public.
They most go into debt to gain relationships and these are the type of people that are trying to survive at the moment.
Plan For The Worst During The Best Time
That is something my family has always told me since I was young.
My parents didnât grow up in a wealthy, upper-class neighborhood as I’m fortunate to be in today.
They took the risk to come to the United States, work several jobs, live as frugally as possible, and spend all their free time including before and after work and of course weekends on honing their skills.
If you get paid for your manual labor, that will slowely kill you.
Get paid for your skills, not for your time.
You will not be able to sustain clocking in and out every day with no breaks.
Compared to Pre-COVID times, life was hard as well.
There was:
-Tons of competition in the job market
-Inflation
-High interest rates
-No free time
-Too much partying
-Worrisome bank accounts
You Really Can Live Below Your Means. It’s Not That Hard
Along with practicing to live pennilessly, I always make sure Iâm grateful because it keeps me grounded and allows me to work harder.
Those who prosper during recessions, depressions, and health crises, are the best planners.
Smartness and intelligence donât mean anything to me.
You can live frugally but if you still suffer during the worst times, that means your investments, mindset, and spending is in the wrong place.
Letâs face it.
No matter what happens in the market or economy, it is all triggered by the human response.
If there is a downturn, the indexes will naturally go down becuase of fear.
If you own several real estate properties and your tenants must be evicted, it isnât your fault, but you should always expect it regardless.
Expect the worst.
We have to be realistic, not pessimistic, or joyful because that gets you through the tough times in life.
Don’t Work Too HardÂ
Last week, as the CNBC enthusiastic I am which I don’t know if I should really be proud of as a teenager, I was watching Squawk Box and one of the headlines wrote JP Morgan employees took advantage of small business loans but at the same time, there are struggling non-investment bankers trying to fetch for clean water and food in Detroit.
Of course, these hard working bankers thought they could cheat the system and get an extra bonus.
Spoiler Alert: Now they are unemployed becuase of a small act.
The world is divided and the divide is getting greater.
There were over 30 million Americans who received the extra $600 per week unemployment benefits but regardless if you were unemployed or a student like me, you could apply for it.
I took advantage of it becuase I was supposed to have a paid internship but most students took the free money for no reason.
This reminds me of the student discount on Apple’s site.
They don’t require any student identification. It’s just a gimic to get you to purchase more or in the case of stimulus packages, for the richer to get richer and the poorer to get poorer.
According to one estimate by the University of Chicago economists in May, as many as 68 percent of newly unemployed workers were on track to collect a higher salary under the enhanced benefits.
Has Congress learned about this and thatâs why they havenât continued?
Vox states, âThe numbers tell a clear story: the US is generally not kind to the working class. According to MIT’s Living Wage Caluclator, a true living wage shakes out to about $16.54 per hour – but no state has a minimum wage that high.â
Why are Americans not hesitant or thinking about the future?
It is all we have and partying enjoying the present cannotprovide any benefits, expect for a hangover the next day if you enjoy that…
Your best bet is to start to live frugally and allocate as much as you can into savings.
It is hard to reduce your budget but allocating money into CD’s which are higher interest savings accounts is much more beneficial for you than storing it in your checking waiting to depreciate in value due to inflation.
You can be the richest guy in the world but if you donât know how to allocate your money, you can spend all you want, but have none in the bank.
Start with the basic money management rules to get started:
30/30/40 and then 50/30/20 rule for spending.
30% for needs, 30% for discretionary, and 40% stashed into savings.
My parents were always adamant about thinking long term.
SO far in advance, I started to contribute to my retirement savings yesterday.
I’m 19 btw (by the way for those over the age of 40).
As a classic teenager response, I should have been paranoid and questioning this crazy behavior, but then I thought of why?
They want the best for me, there are no cons to doing this and it is NOT a waste of time.
You need to make sure you will have more money when you are older and in the future than now.
There is no reason why you need to live the best life in your twenties.
Blah blah.
Life is short but it is also pretty long!
When was the last time you watched TV?
Last night?
That means life is long.
The way you spend your time not who you hang out with or do as much, but what you fill it with is an indicator of not only who you will become but what you will do down the road.
Enjoy it when you are older becuase you will have less energy, strength, and persistence to live in a studio apartment with 5 roommates now than when you retire and just want to watch your grandkids splash some water somewhere.
These severance packages are desperately hurting or extremely benefiting people.
Sgabbib Nyrogtm a retail worker in Times Square stated that when COVID began she had no savings in her account but âfor teh first time in my life, I had money in my savings. I saved every penny I could. The only time I ever really spent money was to get necessities and some new professional clothes.â(Vox)
Although recessions typically mean you will lose money, it doesnât mean you will lose it all.
While people are panicking about surviving during a difficult time, the wealthy have a different mindset since they embraced struggled when everyone didnât care about doing so.
You want to tell yourself to struggle not the time you are living in.
It is all up to you.
With interest rates low and housing prices below average, it is a great opportunity to get a mortgage, pay off student debt, car loans, credit card debt.
What do you think about opening a restaurant now?
Probably horrible idea according to most.
But in fact, economists say it is the best time becuase rent is low and there is a boom in outdoor dining.
You not only need to think outside the box but also do what others aren’t doing.
Hence, that is why the income gap gets larger becuase those who rise to the top use their knoweldge, they don’t follow the preconcieved assumptions.
Just like with your investments, some people lose everything because they put all their eggs in one basket while some average people turn out rich during pandemics.
This is more common during downturns than in booming bull economic cycles becuase everyone is doing as expected a.k.a average.
Buying Cheap and Not Following The Crowd
The last thing you want to hear is to be “DIFFERENT”(imagine sparkles) and venture out of your comofrt zone.
Although those are the best ways to make a larger return, it is vital ot remember that bigger risk = bigger return and the opposite of course.
During the midst of 2009, Warren Buffet bought a railroad.
He said, “No one is buying anything so nothing is being shipped.â
There are more people willing to sell their investments than buying them during these times becuase everything is cheap.
Cheapness is an advantage opportunity not a misleading fact as most investors say.
It is the fear of buying when it could still go down that hold people from investing during a recession.
A lot of people will panic and sell out of fear losing more money.
Buy at cheap price and hold, better position for profit.
Most people don’t have the patience to see their money lose in the short term and as result, we cannot deal with waiting.
Isn’t patience a virtue?
âBe fearful when others are greedy and be greedy when others are fearful.â WB
We Love Endings with Lessons So I’ll Sum It Up:
-We all are tempted to follow the crowd and do the most logical thing based on what others have done in the past.
-History does rewrite itself and it is a great opportunity to learn that everything will eventually be okay in the long run. Every war, crisis, pandemic, and exercise class has ended.
-You must take risks to prove to yourself not others.
-Tangibles are garbage and they will only make you more addicted to other’s impressions.
-You truly don’t need much in life and it is 10x easier to live frugally now compared to as a senior.
-Invest in yourself, not your manual labor.
-Life is longer than you think.
-How you spend your time will dictate your future. Habits matter.
-Understand everything takes time and patience is your best friend.
-Being grateful and understanding how to plan will set you on a path to propserity during the worst times.
-Don’t struggle becuase the economy forced you to, struggle becuase you choose to for a better future.