In a corner of the ring, the cicada he struts, shows his muscles to the public and shows a daring that has taken him to the top of the ‘ranking’ of featherweights (although it has also caused him a good number of bruises). To the other side, the ant, shy and cautious, who has been silently climbing positions, beating her rivals with patience, waiting for them to be exhausted to fill them with the direct that makes them kiss the canvas.
A boxing match that is an update of the children’s story of ‘The Cicada and the Ant’, with its moral for all learned as children: the saver is always better prepared for tough times.
And it is totally true, as has been seen since the arrival of the covid-19. Families, businesses and companies with healthy accounts have been able to withstand restrictions much better than those that went to the limit. Does that mean that the thrifty ant will always win every fight? It doesn’t have to. In fact, economic planning experts talk about the concept of financial health, which means having a panoramic view of personal finances to adapt decisions to one’s own and global situation. And, continuing with the boxing analogy, sometimes you have to attack and other times, protect yourself.
This is where the call comes into play ’50 -30-20 ‘rule, which advises dividing income into three different types of expenses:
– Half (50%) must be destined to cover basic needs, such as housing, energy, food or education.
– 30% of the expenses must go to what is called useful or attractive, but not essential, such as leisure, vacations or personal development.
– 20% of the income is advisable save them, if possible, in a separate account that generates some profitability. In any case, this systematic saving will allow you to be better prepared to face unforeseen expenses or meet the objectives that someone wants to set, such as changing homes, taking a master’s degree or retirement, for example.
Appropriate decisions at all times
This rule, obviously, does not have to be strictly followed, but it is convenient keep up-to-date knowledge about income and expenses, and act accordingly. That means that you have to act if you spend more than you enter, so as not to become cicadas without the ability to face the hardest times. But it also works in the opposite direction, being ants that only think about accumulating is not good either for the quality of life itself or for the economy. Hence the importance of planning, anticipating and making the right decisions at all times.
After overcoming the main slope of the pandemic, in addition, as a society it is necessary to face the recovery of the economy through the reactivation of spending after a time of forced savings (because there was nowhere to spend or because of the negative consequences of restrictions in form of ERTE’s or unemployment). According to consulting firm McKinsey Global Institute, Spanish spending will reach the levels of gross domestic product before covid-19 sometime in 2022. Of course, it also reflects that Spanish consumers are a little less optimistic than those in other parts of Europe.
At the same time, reports on the recovery of consumption reflect an uneven recovery, both by sectors and by high- and middle-income families or those with low wages. In addition to the need for public policies that counter this inequality, on a personal level it is necessary more than ever to be aware of whether it is necessary to act like an ant (saving) or like a cicada (not wasting, but generating a certain economic movement).
Another of the concepts that has reinforced the pandemic, and that it would be very good if it remained forever in the collective imagination, is that of responsible consumption or aware. That is, it is not so important if you are a cicada or an ant (or a bit of both), the important thing is if your economic or financial decisions have positive consequences on society and the environment. And that serves both for consumption (food, fashion, mobility …) and for savings (investments in green economy).
In fact, a recently released report from the consulting firm Accenture reveals that the pandemic is making consumers think more about the impact their purchasing decisions have on the environment and society in general. And this translates into a greater interest in the origin of the ingredients and raw materials, the working conditions, the environmental impact of the products, the recycling of packaging … According to the report, “it is no longer enough for brands to speak of responsibility in generally need adopt environmental, social and governance practices, that contribute to the fulfillment of the United Nations SDGs and the mitigation of emissions ”.
Combat, therefore, no longer has anything to do with two ways of understanding life and the economy, because both can be united. According to the idea of financial health, sometimes you have to be a cicada (never understood as wasteful, but with a certain daring) and sometimes, an ant. Consumption and savings, always based on the personal situation of each one and the global context. And, in any case, always act responsibly, thinking that any purchase decision, no matter how innocuous it may seem, always has an impact on society and the planet. And this is, surely, the most important fight that we will have to face in the coming years.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.