We’re In This Together

It’s no secret that the world is going through a once-in-a-lifetime event right now.  The coronavirus outbreak has rocked our entire world.  As the virus has spread from continent to continent, more people have gotten sick, businesses, cities, states, and even countries have been shut down.

It’s easy to get wrapped up in everything that is going on right now and become overwhelmed by all of the news.  It’s easy to get angry at other people and place blame on others for things happening in your life.  It’s easy to panic and assume the worst.  I get it.

What can be difficult during times these is remembering a few things.

  • We are all human.
  • Like it or not, we are all in this together.
  • Everybody is going through this.
  • Everybody will need help in one way, shape, or form.

A few weeks ago, Morgan Housel wrote a post outlining 100 little ideas from different fields that explain how the world works.  I wanted to outline a couple of them today, and provide some commentary on how these ideas apply to our current situation with the coronavirus.

  • Normalcy Bias: Underestimating the odds of disaster because it’s comforting to assume things will keep functioning the way they’ve always functioned.
    • Keeping this strictly financial, this situation is a perfect example of how hard it is to plan for disaster when times are good. Financial planners everywhere constantly preach about the importance of an emergency fund.  “Anywhere from 3-6 months of expenses” is the general rule of thumb I’m sure you’ve all heard.  However, when the economy hasn’t seen a downturn in over 10 years and the stock market has been going up for just as long – I understand why it was difficult for people to see the merit of having money safe in an emergency fund.
    • That’s the tricky part about emergencies. We don’t know when they’re coming, or what they will entail, so it’s hard to take them seriously.  The small silver lining here is that hopefully this will help people put their normalcy bias aside and get better prepared for the next emergency once all of this calms down.
  • Actor-Observer Asymmetry: We judge others based solely on their actions, but when judging ourselves we have an internal dialogue that justifies our mistakes and bad decisions.
    • It’s incredibly easy to watch what other people are doing, whether it is in their personal life or financial life, and judge their decisions wondering how or why they could be doing such a thing. When looking at other people, it seems ridiculous, but if WE are the ones making that decision – there’s always a justified reason in your head.
    • I guess my point is that especially during crazy financial times like this, try not to be so quick to judge other people’s decisions. Just like you, they have a justified reason in their head (even though it might not be true) for their decisions.  I like to believe that most people don’t make mistakes intentionally.  They believe it’s not a mistake at the time.
  • The 90-9-1 Rule: In social media networks, 90% of users just read content, 9% of users contribute a little content, and 1% of users contribute almost all the content. Gives a false impression of what ideas are popular or “average.”
    • This one is really important. It applies to social media, especially when it comes to spreading information about the virus, but it also applies to spreading information about financial decisions.  It’s easy to assume that because a few people on Facebook have posted about “getting out of the market” and “going to cash” that EVERYBODY must be doing it.  It’s simply not the case.  Please remember to take what you read on social media with a large grain of salt.  The voices of a few don’t represent the masses.
  • Self-Handicapping: Avoiding effort because you don’t want to deal with the emotional pain of that effort failing.
    • This might be the most important one of all. Just because things are tough, and your chances of success feel slim, doesn’t mean you should avoid the effort of trying to keep your finances in order.  The one way to guarantee financial failure is to not try.  Please don’t give up.


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