PETE THE PLANNER: Pandemic already has delivered lots of financial lessons

I know we’re not at the “what I learned about my financial life from the pandemic of 2020/2021” point in history quite yet, because people are still getting infected in droves and the economy feels half closed. Honestly, I’d prefer to pen that column once we beat this thing, whenever that might be, and I might just do that. But I do feel I’ve already learned a ton, and those lessons have brought me a sense of thankfulness.

Yes, I understand expressing gratitude for financial lessons learned during a period filled with so much pain and sorrow feels flippant. But rest assured, I’m not ignoring human loss as I explore pragmatic financial validation.

Every stock market catastrophe feels different from the last. The events that lead to the market meltdown are most certainly unique, but the market’s handling of those events has become shockingly predictable. For instance, following the terrorist attacks of Sept. 11, 2001, the S&P 500 sank 14% in just one week, once the markets finally opened on Sept 17. Yet, the market recovered and the only long-term investors who lost money were those who sold in a panic.

The same thing happened after Black Friday (Oct. 19, 1987, not the day after Thanksgiving) and during the Great Recession of 2008-2009 (which actually began in 2007). Yes, there was pain and economic turmoil during those days, just like these days, but the long-term path of the stock market itself remains as formulaic as one of those spy thrillers with the ruggedly good-looking 40-something hero that my wife says I read because I haven’t realized the authors are tricking me into thinking I’m the one on the secret mission.

The 2020 market meltdown convinced us we’d never seen anything quite like this, then it did the same thing it always does: Find its level.

The next lesson is a bit more difficult to talk about because it feels like an “I told you so,” and I’m not exactly an “I told you so” kind of guy. It turns out that you really do need an emergency fund, and a hardy one at that. This has always been true and will always be true.

The problem is, Americans tend to value comfort over stability. Trust me, I’ve been there. When times are good, we understandably exhale and enjoy the fruits of our labor. But creating true financial stability, like having three to six months of expenses set aside, proves time and time again to be the more prudent choice. The fact is, once you create the stability, you can get right back to enjoying the fruits of your labor. Comfort will never lead to stability, while stability will absolutely lead to comfort.

Additionally, the dynamics of the spring truly allowed me to reevaluate my consumer habits and understand their impact on my life. Watching my discretionary spending shift from January 2020 (normal) to April 2020 (scarce) to November 2020 (new normal for now) has felt like my own doctoral thesis on fear and resourcefulness, had some institution admitted me to grad school. From grocery habits and carryout to clothing purchases and entertainment, I’m a completely different person than I was less than a year ago.

If I were to chart my habits and spending, it’d look like a Bob Ross mountain-scape. Now I’m simply trying to ensure the next elevation change is less steep than the last, all while keeping an eye toward local restaurants and small businesses that badly need my patronage. As you know, this is quite stressful and complex.

Objective financial stability makes this dance less complicated. Those of us who’ve always been guided by the quest for comfort are in a no-win situation right now, while those of us who’ve made stability their priority are more readily available to contribute to the survival of our local businesses and charitable organizations. This isn’t a theory. This is real. And when this period of our lives is over, I hope there’s a stability awakening, as opposed to a rush to return to the temporary comforts that proved to be emptier than we had hoped.

Finally, I’ve continued to come to terms with how easy it is to allow distractions to take me off course. It’s convenient to let the copious amounts of “important” happenings all around me influence my resolve. But remembering what I can control and what I cannot continues to bring both quantitative results and catharsis.

I can’t even imagine what all I’ll have learned when this is all over.•

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Dunn is CEO of Your Money Line powered by Pete the Planner, an employee-benefit organization focused on solving employees’ financial challenges. Email your financial questions to askpete@petetheplanner.com.