The lessons that the pandemic left us on financial education

Financial education is an indispensable tool for daily life that develops over time. Hence the importance of beginning to instill it from an early age. And, in any case, it should be encouraged not only among the youngest, but also among adults.

One of her goals is to create financial habits that can help develop a healthy relationship with money. Thus, financial problems (debts, defaults, bad investments) can be avoided in the future.

The pandemic revealed the financial weakness of a part of the population, which was not prepared for this crisis. And it has served as a hard lesson for families on the importance of saving and containing spending.

What happened to the income?

With social distancing measures and widespread lockdowns, the spread of the virus could be controlled but, in return, jobs were lost. Thus, the income of individuals and companies were affected in various ways.

In some cases, the reduction in working hours had a significant impact on income. The sectors most affected were, mainly, the hotel, restaurant and leisure industry, due to the confinements.

In others, teleworking could be introduced, which helped to maintain business activity, and also many jobs, thus mitigating the negative effects of the temporary closure of some establishments.

What was the spending situation?

During the pandemic, household expenses were modified: the confinement caused expenses to be omitted and generated savings for families.

The paralysis of activities minimized mobility, which reduced expenses such as transportation, entertainment and social activities in general. It also affected massive events (concerts, sporting events) so tourism and entertainment were affected.

In the academic part, face-to-face classes were suspended and began to be taught virtually, as was the case with the holding of forums and congresses.

As there was no face-to-face activity, some families had significant savings in these items. However, the confinement generated greater spending for consumption at home: food, cleaning, health and personal care. In addition, many of the households had to increase their spending on technology and services to be able to work and study from home.

Increase or decrease in savings?

Due to economic uncertainty, mobility restrictions and confinement, there was a general reduction in expenses. But, in some cases, the loss of employment or the decrease in economic activity also caused a decrease in income. Therefore, not all families were able to save or could not do so in the desired way.

Another of the situations that is detected is that there were unforeseen expenses related to health, due to having to support the care of sick relatives and this caused a financial imbalance.

A financial lesson

The loss of employment and the reduction in income worsened the economic situation of many and led them to go into debt to meet their daily expenses.

In Mexico, the Federal Government implemented economic support measures, but even so, there are families that continue to have financial problems due to the accumulation of debts due to the pandemic.

Both the income and the expenses of the families were impacted by the economic and labor uncertainty caused by the health crisis, so many chose to save and reduce their expenses to face it. Others, on the contrary, had to borrow.

In short, the pandemic made many families rethink the way they manage their financial resources and made very clear the importance of saving, the need not to abandon this habit, on a smaller or larger scale, and the financial culture acquired in those months of uncertainty.

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