ValueChampion Asks Budget Babe: What Personal Finance Lessons Can We Learn From 2020?

SG Budget Babe is one of the most respected personal finance blogs in Singapore with millions of readers and thousands of subscribers. Founder Dawn’s carefully researched and thoughtful posts appeal to everyone from newbies to personal finance to seasoned investors. As COVID-19 ravages many people’s finances, we’ve discussed lessons, challenges, and surprising rewards that can help us all better prepare for future financial emergencies.

1. What was your first reaction to the news that everything was going to be closed? Have you and your family taken steps to prepare?

I had expected it, because Singapore also had a kind of “lockdown” when we went through the SARS crisis, even though I was still young at the time. As parents this time around, we took a trip to the grocery store and bought dry goods like rice, canned food, and a few snacks just to make sure we could feed our family for at least a month in case something should happen.

2. What was the biggest challenge with the circuit breaker? What about the rewarding aspects?

I’m an extrovert-introvert so I didn’t find it too difficult on a personal level, especially when friends and family were just a WhatsApp message or a Zoom video call away. In fact, I loved not wasting time commuting to work!

The biggest challenge was my husband’s income as his job involves a lot of face-to-face meetings and sightseeing. Fortunately, we had enough emergency money and I was also making money from work and classes (albeit now online) so we never had to resort to credit to get through. He just had no savings during that time.

As a parent, it was the best thing to be at home with my child and watch them grow. I rarely spend much time with him on a normal work day because he usually sleeps when I go to work in the morning and just before sleep when I come back in the evening.

3. What was one of the most important things you learned about managing your finances in 2020?

Instead of learning something new, 2020 reiterated our decision to Be a little more conservative about how much you can set aside for emergency money. General guidelines usually recommend 3-6 months as sufficient, but I’ve always felt it took us 12-18 months, given the instability of my husband’s job and the sheer number of loved ones we were financially responsible for.

It also confirmed my belief that you have to build multiple sources of incomebecause the employees who relied solely on their paychecks were hardest hit during this crisis.

4. In one of your last articles, you mentioned steps people can take to be financially better the next time a crisis arises. What do people overlook most when planning to be financially prepared for emergencies?

People usually underestimate how much they need when an emergency arises. This has to be approached from two perspectives – ensure adequate protection through insurance and have sufficient emergency reserves.

“Enough” means something different for everyone, so personal awareness really has to come into play here. Do not just rely on general online instructions, but adapt them to your personal circumstances!

5. You mentioned in some of your investment articles that times of uncertainty (like 2020) are good opportunities to take calculated risks and that doing your research on quality companies is always better than trying to time the market. Are there any new or surprising investment lessons you’ve discovered this year?

Yes, I’ve seen more alternative forms of investment vehicles like options and real estate. In the past I thought options were a dangerous tool after hearing so much about them, but it seemed like options went incredibly well for a lot of people this year!

Like everyone else, I was surprised by several stocks and their performance this year, such as Tesla, Hertz, Kodak, to name a few. Valuations are rising and we have to adapt our models and investment concepts accordingly.

The nice surprise was also in cryptocurrency. I’ve been optimistic about Bitcoin and cryptocurrency since 2017, to the ire of some other financial writers at the time. Those of us who have invested since the previous wave have long talked about the problems with Fiat, but not a lot of people (especially older investors and institutions) took us seriously so it’s really nice to see the skeptics start around to soften their attitude and finally to recognize that Bitcoin is and can be a good sustainable investment for one’s own portfolio.

6. Are there any financial habits that you have developed as a result of COVID-19 that will take you with you from 2021?

An open mindedness to explore new investment vehicles and I will use 2021 to deepen my knowledge and understanding in these new instruments before I start writing about them.

7. When precautionary measures were put in place, many families experienced vacations or reduced paychecks. What advice would you like to offer to help families with financial difficulties maintain expectations in times of uncertainty?

The quickest way is to either cut expenses or increase income. Depending on each person’s scenario, there might already be a limit to how much they can cut their expenses, so I would personally advise them to consider how to build their income instead. This can be done through a simple part-time job, e.g. B. by selling handmade items online or even by starting a curation business and selling on Instagram. If you enjoy cooking or baking, you can even start a small home business selling your creations. Being a parent can help you find ways you can add value to other parents. For example, if you are already spending so much time on your child’s education, could you share this with other parents and monetize them?

8. In difficult times there are always cases in which vulnerable people are financially exploited. The pandemic was no different. What are some things that you think are never worth the money or risk and others that are worth the extra cost?

Anything too good to be true usually is. Anything that helps you improve (in terms of skills, knowledge, career development, or income growth) is always worth the extra charge, and it doesn’t always have to be in money. If you don’t have the funds to pay for a shortcut, those costs can instead come in the form of time, effort, and energy.

Article has been edited slightly for the sake of clarity

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