As we head into a new normality, it will be important to reflect on the lessons learned from being in lockdown. There is every possibility of a second wave of disease or even yet another pandemic in years to come. By learning from this experience, we will be more prepared for next time.

Resilience is what separates winners from losers in time of crisis. When it comes to managing your financial affairs, the key aspects of resilience include the following:

1. Be prepared for adverse events. It’s a fact of life that things go wrong and it’s usually when you least expect it. This is not about being pessimistic – it’s about being realistic.
2. Have a financial buffer that you can call on easily and without excessive cost. A credit card is not a financial buffer. A line of credit secured against your house at a low interest rate, and money in a savings account are part of your buffer.
3. Keep debt repayments to a level that is well within your budget so you can stay on top of your financial commitments even with a significant drop in your income.

Many people found that over lockdown, their weekly expenses dropped significantly. It was a wake-up call for those people who can now see the potential of increasing saving by cutting out spending on unnecessary items. People who save first and spend what is left increase their resilience and are more financially successful in the long term.

KiwiSaver investors had an opportunity over the last few months to learn about market volatility. Those who panicked and switched to conservative funds crystallised their losses and missed the market rebound. What goes down, eventually comes back up again. Bad times are followed by good times, and life goes on, with lessons learned.