I don't pretend to like the financial impact of the pandemic upon savings opportunities. However, I am grateful that the pandemic has forced me to develop a more resilient attitude towards savings.
1) First, the pandemic has forced me to become more strategic. The great military strategist Clausewitz once said: "Strategy is the necessary response to the inescapable reality of limited resources." That is certainly the case with respect to the pandemic. Strategy has meant first increasing emergency savings to six months of expenses because three months is not longer enough. Second, strategy has meant expanding the semantic range of "savings" beyond CDs, savings accounts, and interest bearing checking. It has meant paying down debts (in my case--my mortgage--since I have no other debt). Paying down a debt effective earns the interest rate of the debt being paid down. Thus paying down a 4% mortgage is like earning 4% interest.
2) Second, the pandemic has encouraged me to make priority purchases sooner than anticipated. If I was earning 4% on CDs right now, my wife would be waiting another year or two for a new car, so that our savings could build. However, with savings and CD rates so low, I just wrote a check to the dealer for a new 2020 Honda Fit EX--as there was no savings opportunity lost when I was only earning .60%. Her old car was a 2003 with 270,000 miles, so this was a great chance to take care of this priority need sooner rather than later. My wife was thrilled that she and I were able to achieve this goal sooner than we expected.
3) Finally, the pandemic has made me take a long term focus on savings: The reality of savings is like the rhythm of life--there are many ups and downs along the way. I now accept these ups and downs without anxiety; and as I look at the long term performance of my savings and investment portfolio--I see some good and bad years--but an overall satisfying return because I stick to the plan during dark financial times and stay the course.
