Pattie Lovett-Reid

Chief Financial Commentator, CTV

Follow|Archive

2020 changed us. 

The pandemic has wreaked havoc in our lives. We have lost loved ones, lost jobs, lost our freedom, and lost our carefree attitude – just to name a few. 

COVID-19 has transformed our work environment, travel intentions, educational landscape and affected us in ways that we didn't see coming. Our spending patterns have also changed and driven a strong need for a psychological financial safety net. Fear of the unknown has led us to spending less and saving more. 

It took a pandemic for us to clearly grasp that we need less stuff, and along the way we gained clarity around the difference between a need and a want.  We are going through a re-calibration of what really matters, what we are spending our money on, where we spend and why we spend. 

This isn't a bad thing, but there is a knock-on effect. It is great for families to adjust their financial mentality, but if the fear grips too fiercely the economy will suffer. 

We need those who can afford it to spend – not go into debt, or go back to our old habits – but mindful spending. 

​Living below your means simply amounts to not spending more than you earn. You create wealth by spending less than you make. This doesn't mean you can't spend money on the things that matter to you to create joy in your life. You have earned the right to do that and the economy needs you to embrace it. It is about making conscious financial decisions. 

I buy into the concept of pent-up demand for goods and services and even the occasional indulgence once the vaccine takes hold, but it may be temporary. This past year has taught us to expect the unexpected and prepare for it.

I will never give up on the importance of having an emergency fund.  I have preached about it ad nauseam and it has often been ignored in favour of the “shop-til-you-drop” mentality. If you question that, consider our debt levels prior to the pandemic. We now understand that behaviour isn't sustainable. Our savings rate was next to none for many heading into the pandemic. Look no further than the government’s response: When COVID-19 hit and households panicked, fears mounted due to the little financial flexibility they had to make ends meet. Many simply had insufficient savings or cash on hand to pay the bills.

Today I would argue there is a new "financial sobriety" and I have no doubt it will be good for households. The pain of the last year was enough to change behaviours. However, it may not be good for the economy as it struggles to gain traction. 

If there is a word that I hope will describe 2021, it would be "balance." With this past year behind us, we’ve come to the realization that we don't have to save until it hurts, nor should we spend as if there is no tomorrow.​ 

HAVE YOUR SAY

How has COVID-19 impacted your view on savings?

Results

Total Results: 0