What coming out of lockdown means for your finances & how to protect them

Oct 21, 2021

This week: What coming out of lockdown means for your finances & how to protect them

In this video I talk about financially coming out of lockdown well. That's because there's behavioural science around deprivation (think diets, budgets, strict exercise regimes and more) and how we're likely to 'act out' afterwards. It's a gentle reminder with practical ways you can still celebrate as well as look after future self.

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Hey, and welcome to Mel's Money Musings.

Today I want to talk about finances coming out of lockdown, and this doesn't mean that you weren't in lockdown. Your business might have been affected. You might know someone else in lockdown, but with New South Wales, Victoria, and ACT particularly coming out of lockdown at the moment, I wanna speak to you and your finances. Because what we know from human behavior is that during times of restriction, when that time is over, you will generally bust out. So if we look at budgets, what happens when that strict budget period is over, you spend whatever you've saved. If you have a diet it's a really restrictive eating pattern. What happens when that's all over? You put back all the weight on and more that you might have lost during that super restrictive time. Same for exercise. And I can give you an example, upon example upon example.

So if we know that from human behavior, and if we've just come out of periods where we've been unable to spend, unable to go out, unable to connect with people, guess what we are potentially going to want to do? We are potentially gonna go and treat it like it's Great Gatsby, the roaring twenties, and sign me up for everything. And I'm not suggesting that's problematic, but what I want you to think about is what does that mean for your finances? Because for some of you, you will actually be in a far worse financial position now than when you went into lockdown.

So what I want you to do is rather than go into more debt and more debt, because you think that you deserve it, I deserve it, I should be able to go out. I want you instead to talk to your friends now and say, Hey, I want to connect. I wanna be included, but I've been so financially affected during lockdown. Can we do a budget friendly version of going out? Or can we go to each other's places? Or can we order in? If you don't have that conversation, your friends won't know. And if they're good friends, they'll actually give a sh*t. So they're gonna want you to have that conversation.

The other thing to do is to put a sum of money aside. So what we know is that there's $25 billion that was grabbed by households when we went into lockdown. So some households actually have more cash than they did going into lockdown. For you, I want you to think about that and say, right, I'm gonna nominate a figure that I'm gonna spend celebrating lockdown. Whether it's going out, catching up with friends, whether it's having that 'I'm free meal', but then finish it then, put that sum aside, and say right - that's what's for that's for, even open up a separate bank account, call it your "coming out of lockdown account", nominate the sum. And when that's gone, then that's it. But in the meantime, enjoy it completely guilt free.

Now, if you have kids have a chat to them about this, have a chat to them about whether you've done it financially tough. And so just because we've come out of lockdown, doesn't mean things are going back to normal for us or talk to them about this concept of human behavior and how this is what they're gonna wanna do. But we can't. I also want you to think about the fact that just because you've done things in the past doesn't mean you have to do that now. And I'm hearing from families that are going, oh, you know, it's back to three and four kids activities and that's gonna be a real drain on our finances. So maybe this is your opportunity to sit with your kids and say, right - so pick one or pick two. And that's it. We're not going to go back to that, uh, leaky bucket of finances, but also running around like mad chooks that we were before.

And if you don't have kids again, it's looking at that and going, what was I doing before that I don't miss, but taking the opportunity now to say, what did I sign up to during lockdown that I don't need anymore? What can I unsubscribe from? How can I change my finances to suit this? So I don't have this leaky bucket of expenses.

And then finally I want you to have a think about 2022. I want you to think about your plan for 2022, to think about what financial goal you want to reach. And it might be hard to do that today. So maybe just have that burning in the back of your head because I want you to be so excited about that. So excited the possibility of that, that actually you are happy to not spend everything and go into that hole now, because you wanna set some money aside from that.

Yes, some of us are going to want it to be like the roaring twenties. But what I wanna do is be the voice of Future You going just enjoy coming out of lockdown, but also keep Future You in mind. Make sure you don't take on debt. Make sure you speak to your friends, make sure you put a sum of money around going out. Make sure you talk to your kids if you have them. And then finally think about what you wanna get excited about next year with your financial plans and how you don't wanna undo that by doing this, all this work now.

We're rolling up our sleeves and coming up with a free gift for you in December to really help you with this, but wanted to come on and make today's musings all about making sure you don't become financially undone in the meantime, cause we wanna celebrate lockdown coming out of lockdown. We wanna celebrate connecting with our friends. We just wanna make sure that we are doing it in a way that we are being financially wise while we do it. All right, everyone have a fab weekend and for Victoria, celebrate, celebrate, coming out.

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