What Covid-19 has taught me about my money

As I struggle to think of the right adjective for the last couple of weeks I have settled on “interesting”.

I, like many, have found myself spending all of my time at home.  I had 2 weeks of self-isolation when the lock-down occurred as my children were showing symptoms and I looked forward to day 15 when I could go “out-out” to Tesco!!

My children are 6 & 3.  I have a new-found hatred for Joe Wicks at 9.30am in the morning and have balanced home-schooling (sort of) with generally trying to keep their mental health our main priority.

My working week is massively condensed.  My wife works in Kettering General Hospital and as her work is significantly more important than mine and I have taken on the majority of child-care during the week.  The result is early mornings, late nights, and many moments where my children have joined video meetings unexpectantly.  My mum even asked me what I was doing with all the extra time I had!! To which I had to explain I have significantly less time!  I am getting FOMO from all the virtual networking occurring.

My trip to Kilimanjaro this summer looks very unlikely – probably a good thing as the training has gone out the window!

Like many reading this, I am a director of my own limited company and fall between the cracks for any support being offered.  I’m not complaining.  I have prepared for this.  Well, maybe not this specifically, but I have prepared.

You see, for all of my clients the first thing I insist on is them having 3-6 months’ worth of expenses in readily available cash savings to provide an “emergency pot”.  Thankfully, I practice what I preach.  My earnings will be down this year – no doubt about that.  But my savings are fulfilling their purpose.  They might not earn much interest, but they are doing their job and are there for when I need them.

Luckily, I also entered into this period with about 2 months’ worth of expenses in my business account.  Therefore, I could afford to ride this out for 5-8 months of zero income before I have to have any cause for concern.

One of my clients works on having 3 month’s work of business expenses on account at all times.  I know he’s benefiting from this now.

I appreciate other businesses can’t do this and some are better equipped than others.  For example, Apple has $200bn in cash and can pay 6 years’ worth of operating expenses (The Economist 28/3/2020) but a lot of businesses carry less than a month’s worth.

For me, having an emergency pot also allows me to ignore the recent stock-market falls in my own portfolio.  That’s not to say there is no cause for concern, but there is a difference between concern and panic.  I have spent a lot of time talking to existing clients and re-assuring them that the strategy we have is still the right one.  Stock markets have dropped in the region of 30% from their highs in February to the lows seen in March.  We knew the longest bull market in history had to end at some point, but I’m not sure how many of us thought a virus would bring it about.

Markets may drop further, but they will grow again.  They always do.  I can’t with any certainty say when this will be.  I am no epidemiologist and can’t comment on the health and medical factors at play, and I certainly don’t have a crystal ball.  However, history shows the ingenuity of the human spirit and that we will endure.  This too shall pass.

As a result, I am making no change to my portfolio at all.  If anything, I am trying to be more disciplined.  I have considered whether to put some of my savings into the market, but this is not the right thing for me to do.  They have their job – to protect me and my family when I need it most.

My earnings have dropped but so has my expenses.  I have noticed how much money I usually waste.  With no money being spent on takeaways, posh coffees, or a day out just because the sun is shining, I am reminded of my younger years.  We made do.  If I had a football, I could entertain myself for hours on end.  My children too are now learning this skill of entertaining themselves without us having to spend any money.

I have learned the pleasures of a leisurely walk.  Of having lunch in the garden with my family.  Of catching up with friends on virtual quiz nights.

My work is more efficient. More video calls, less travel, less paper being used, less costs.

People want to “get back to normal”.  I’m not so sure I do.

Yes, there is plenty I miss that I want to get back but I am looking forward to a new normal.

Of being more conscious of what I spend my time doing.  Of directing my money where I want it to go.  So that in the long-term I have more financial independence to choose what I want to do and when I want to do it.

Here’s looking forward to a slightly different normal!