Why saving is the smartest thing to do in a pandemic

With so many places and activities shut down, now is a good time to build a financial safety net

coins of uae, also known as dirham. image taken in dubai. Getty Images
Beta V.1.0 - Powered by automated translation

The world is an uncertain place, which can cause fear and even panic. When people panic, they make choices that are less than optimal but we can fight back against these urges. One of the best ways to feel a bit more in control is by saving money. Building up a stash of cash can give us choices when we feel like everything else is falling apart. At the very least, it can help us feel a little less anxious about one very important element of our lives.

Saving money right now also allows you more choices later on, as it gives you a back-up plan in case you need one.

As places and activities shut down around us to protect us from the coronavirus, this presents us with a multifaceted opportunity. Less things to do gives us less things to spend our money on. Our behaviour is often dictated by our environment, and shopping is definitely one of those behaviours. Covid-19 has changed our environment, and for those with out-of-control spending habits, this can be a great opportunity to switch your behaviour to the more frugal side.

Instead of shopping, read a book, listen to a podcast or catch up on that Netflix show you've been meaning to see. Rather than going out to eat, cook for your family. To replace the gym and fitness classes, take a walk around the neighbourhood, visit a park or go for a run. All of these behaviours will help you develop good habits whether there's a pandemic or not, perhaps except for Netflix, but, hey, a little distraction won't hurt you in these times.

Focusing on these free activities will not only help you now, but also in the future as you develop lasting habits that will make you happier, healthier and wealthier down the road. By breaking your shopping habit now, you can realise that happiness doesn't have to come from swiping your credit card.  Lasting happiness comes from pursuing your purpose, learning, exercising, appreciating your loved ones and enjoying art.

Saving money right now also allows you more choices later on, as it gives you a back-up plan in case you need one. For me, I'm supposed to move to China in July to teach there for the next two years.  All signs point to that still happening, as of today, but a niggling part of my mind is worried that with all this uncertainty, I won't have that opportunity. So instead, I'm saving my cash.

I already have enough set aside to live off for one to three years, depending on where I spend my time. I won't have to sell any of my investments, which have lost value due to the market's recent volatility. While I don't know that this will fix all my problems, it certainly helps me sleep better at night knowing that I'll be OK for the foreseeable future.

The other great reason to save money right now is to take advantage of investment opportunities later. Stocks, bonds and real estate have been priced quite high in many markets around the world. After a panic sell-off, if you have a large cash position, you can be in a great place to invest when things are cheaper. As the old expression goes: "When there's blood on the streets, buy property." People who survived the last crash of 2008 are those that bought when the market was low and gained a huge amount in those following years.

While it's important to stay informed on this rapidly developing situation, obsessing over it will only increase your anxieties. When you're anxious, that's where advertisers want you, because you're not thinking clearly or logically. You're more likely to buy their products, even if you don't need it or can't really afford it. That's another reason to try to find activities that keep you from focusing exclusively on the dangers of an uncertain world.

Also, remember to be grateful. Your friends and family are hopefully still there for you. Food is still delicious. The sky is blue. Remembering these things can keep you from the darkness that can cause you to spend too much money in retail therapy.

Saving more money now can benefit us in multiple ways. Hunker down. Stay safe. Store your money.

Dubai schoolteacher Zach Holz (@HappiestTeach) documents his journey towards financial independence on his personal finance blog The Happiest Teacher