The COVID-19 Pandemic has changed the lives of every living thing on Planet Earth. The old normal is gone to be replaced by a new normal from now on. The problem is how to determine what the new normal is for habitants of Planet Earth. More importantly, how to determine our own personal new normal.
The CORVID-19 Pandemic brings to mind “the butterfly effect” which many people understand as a theoretical concept where it is imagined that a butterfly flapping its wings in a far off land can cause a disturbance in the air currents that can cause a catastrophic weather event such as a tornado thousands of kilometres away. A pandemic has nothing to do with how serious an illness is, it just means a disease is spreading widely and at an alarming rate. This is exactly what has happened with CORVID-19, from a single contraction of the disease in Wuhan China, a catastrophic worldwide event was triggered that spread globally.
Many examples exist of how the butterfly effect has shaped our lives including:
- The bombing of Nagasaki. …
- The Academy of Fine Arts in Vienna rejecting Adolf Hitler’s application, twice. …
- The assassination of Archduke Franz Ferdinand. …
- The Chernobyl disaster. …
- The Cuban Missile Crisis.
Governments around the World are putting into place new rules, mostly restrictive in their efforts to revitalise a global economic downturn. South Africa was severely economically challenged before CORVID-19 and faces an almost insurmountable task of economic recovery. With this in mind and leaving both global and local politics aside, I reflect on changes that everyone has to make on their personal finances and a re-determination of what is important in order to sustain their lifestyle.
This brings to mind lessons learned from Abraham Harold Maslow who was an American psychologist and was best known for creating Maslow’s hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.
He was best known for his work in determining Maslow’s Hierarchy of Needs which is a motivational theory in psychology comprising a 5 tier model of human needs depicted as hierarchical needs within a pyramid.
From the base of the pyramid upwards, the needs include:
PSYCOLOGICAL: Shelter, food and water, warmth, clothes, sleep…..…..
SAFETY: Personal, Financial, Emotional, Health & Well-being………
SOCIAL: Friendship, Intimacy, Family, Belonging……….
ESTEEM: Inner strength, Confidence, Recognition, Status, Importance, Respect…….
SELF ACUALISATION: Partnering, Parenting, Developing Talents, Ability, Pursuing goals……….
Maslow Quotes include:
“What a man can be, he must be. This need we call self-actualization”.
“A musician must make music, an artist must paint, a poet must write, if he is to be ultimately at peace with himself”.
“If the only tool you have is a hammer, you tend to see every problem as a nail”.
Having reflected on where we find ourselves, we need to understand the need to stop, take deep breaths, re-think and re-boot our lives and most importantly re-model our thinking around our personal finances and how they underpin our lifestyle and that of our loved ones. We need to understand what boxes we have ticked in our own pyramid as outlined above on our journey to self -actualisation.
I have always maintained that most South Africans are only one payday short of personal financial distress. The fact that most people spend 100% of their nett income without making provision for emergencies results in financial distress when faced with situations such as job loss due to retrenchment and/or short pay as is being experienced by most South Africans due to the pandemic. Those who have savings can fall back on these reserves to maintain their lifestyles with a view to replacing the savings in the future.
With this in mind, I encourage all to put time aside and re-boot their thinking around putting into place a re-structuring of their personal financial plan by adopting some basic and essential steps namely:
- Set out a monthly budget of your finances and include the family.
- Create an emergency savings plan
- Pay of debt as soon as possible
- Pay your bills on time
- Review your Insurance Portfolio with your Financial Adviser
- Create a filing system for all of your important documents
- Ensure you have a valid Will in place
I cannot stress enough the need to review and re-assess your personal financial situation on an annual basis and more importantly to be pro-active and not re-active to crises such as we find ourselves in.
SOURCE: Allen Hargreaves, Financial wellness trainer Invest in Yourself
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