Don’t waste a crisis
How to use the COVID crisis to better understand your spending.
Rahm Emmanuel, former Chief of Staff to Barack Obama, once said, “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”
We mustn’t ignore the severe economic hardship being suffered by too many at this time. But for those of us who remain employed, prolonged periods of lockdown provide a unique experiment: surviving without things we considered essential just a year ago.
A chance to find out what you really value
Many of us are finding the enforced social isolation has significantly reduced our expenditure. We can no longer buy our morning coffee and pastry. We’re making our own lunch instead of buying it in Pret à Manger. We’re not going to restaurants, the pub or cinema. We’ve receiving refunds for flights and holidays booked over the year. We’re no longer going leisure shopping for clothes, handbags, shoes or gadgets. This can amount to hundreds of pounds per month.
We could simply fall into reinstating these expenditures when we come out of lockdown. Many of the providers are hoping we will: Sky and my gym have suspended monthly payments so that I don’t cancel these subscriptions, leaving them with the right to restart them when they reopen. Airlines are trying to direct us towards rebooking rather than refunds. But what if we looked at things a different way and consciously asked ourselves what this spending did for us, and actively chose whether to switch it back on?
When spending has become habitual, it is too easy to convince ourselves that a luxury is a necessity. But when an expenditure has been taken away, we have a unique chance to assess its importance to us with greater honesty. So here’s an exercise for you to try.
Reviewing your expenditure
Take the time to review your expenditure since lock-down and compare it with the previous six to 12 months. What are the expenses that have disappeared or reduced substantially and what are the corresponding things or experiences you’ve lost? List them and quantify them in terms of £ per month. Then ask yourself three of the questions we ask in the spending factor:
Has the loss of this item:
- Caused me identifiable physical or mental harm — i.e. is it essential?
- Led to a noticeable reduction in my fulfilment and life satisfaction?
- Impaired my ability to live my life in accordance with my most deeply held values?
If the answer to the first three questions is ‘no’ then how about resolving to do without that item of expenditure for at least one month after lockdown. You can always restart it later if you change your mind. But see how you get on — just maybe you’ll get used to living without it.
In this way, you can use this period actively to challenge your discretionary spending, identify what you’ve really missed and value, and what you can really do without. You may find all that expenditure wasn’t so essential after all.
That’s what I call not wasting a crisis.
This article was first published by Initiative for Financial Wellbeing.