According to Google, a principle is “a fundamental truth or proposition that serves as the -foundation for a system of belief or behaviour or for a chain of reasoning”. Simply put, a principle is a belief that guides thinking and ultimately behavior.
What is your belief regarding your financial wellbeing during and after COVID-19?
It is obvious that different people have differing and conflicting beliefs regarding personal finance. Upbringing, personal experiences and observing other people’s experiences all play a part in shaping our beliefs and ultimately our behavior regarding giving, saving, lifestyle, debt and taxes.
COVID-19 crisis perfectly illustrates three fundamental economic principles that demand our attention and action in managing our finances to ensure that we are ready for any eventuality.
- Economic uncertainty is certain
Nobody knows exactly what will happen in the future. Even in this crisis, while health professionals may have predicted possible pandemics, no one could have predicted this pandemic’s cause, timing and the resulting impact on people, health systems, economies and disruption to life.
- Economic cycles are normal and cycles cannot be predicted
We just do not know what we do not know; hence, we simply cannot predict the future. There have been past economic crisis such as 2008/2009 global financial crisis and local impact due to post-election violence, and there will be more in the future. However, we do not know when they will occur and what will cause them. What we do know is that there will be periods of economic prosperity followed by economic declines and vice versa.
- Economic prosperity is certain but only in retrospect
In times of difficulties such as these, we are likely to focus on the challenges since the future seems so uncertain to predict and we may be prone to thinking that the hard times will last. This is not the case. In our own country, economic difficulties of the 1990’s were succeeded by economic growth in the 2000’s. Even at a personal level, many can attest to the fact that when they look back at past difficult times, circumstances do change for better, in many instances, much better than they ever anticipated.
What conclusions can we draw from the three principles?
The economic hardship arising out of COVID-19 will definitely not be the last crisis we experience as long as we are alive. We will experience other economic ups and downs. We just do not know when they will happen, what will cause them and their impact on our lives; but what we do know is that better days lie ahead.
Now what?
While we have no control over economic cycles, it is encouraging to know that our God is in full control of EVERYTHING, and nothing happens outside his permission.
The following bible verses have been of encouragement to me:
- 2 Timothy 3:1 But mark this: There will be terrible times in the last days
- Ecclesiastes 3:15 Whatever is has already been, and what will be has been before; and God will call the past to account
- Isaiah 43:1-2 But now, this is what the Lord says—he who created you, Jacob, he who formed you, Israel: “Do not fear, for I have redeemed you; I have summoned you by name; you are mine. When you pass through the waters, I will be with you; and when you pass through the rivers, they will not sweep over you. When you walk through the fire, you will not be burned; the flames will not set you ablaze.
- Psalms 139: (Whole chapter)
Verse 10 Even there your hand will guide me, your right hand will hold me fast.
- Romans 8:28 And we know that all things work together for good to those who love God, to those who are the called according to His purpose.
Now that we find ourselves in the current situation, how should we manage our finances to sail through the crisis? In our next article, we will look at ‘When the unexpected happens’.