The COVID-19 pandemic has changed the way people are managing their finances
This January will mark the start of a new year and the two-year anniversary of the first case of COVID in the US. The pandemic caught most people by surprise, and now most of our lives look completely different. People are rethinking their retirement lines, how and where they want to live and maybe reassessing their future goals.
Many people may have lost their jobs, fallen sick, or taken on extra family responsibilities. All of this can put a strain on you and your household. Now is a time when many are self-reflecting. It is a great time to reevaluate your financial planning.
Recovering From Losses
If you experienced a financial setback during the pandemic, you must think about how to shore up your financial resources. How can you keep yourself afloat financially?
Reevaluate Your Budget
As inflation hits you may find that your weekly or monthly expenses are more than they used to be. If you lost some sources of income or have extra childcare expenses, you need to think about reevaluating your budget. Devise a budget that reflects these changes and make sure you are living within your means.
On the other hand, some people may have managed to save a lot of money during lockdowns. Cancelled trips and reduced expenses may have given you a nice nest egg. Make sure that you don’t go out and spend all that money just because you have it. Put some money towards savings and planning for your future.
Pay Off Debts
Reducing debt should always be a high priority. Being in debt can impact your whole life. It can reduce your ability to save, it can negatively impact your credit score, it can prevent you from getting loans or a mortgage, and it can also cause a lot of stress. If you found yourself getting in debt over the past two years, you cannot spend money as if you don’t have to pay it off.
Make sure you set aside money each month to pay off credit cards, loans, and any other obligations. Make the debts with a high interest rate your top priority. This way you will pay back less in the long term.
Preparing For Future Emergencies
When your finances are stable it’s good to think about how to prevent future setbacks. Preparation is key.
There are a lot of strategies when it comes to saving. In a post-COVID world your first step should be having some emergency savings. This is money that you set aside for medical bills that you weren’t expecting, car or home repairs etc.
It’s good to shop around for a checking account with low fees and good interest rates. A savings account can be a useful way to start putting money away. With a savings account you will not be able to spend money with a debit card.
Stocks, bonds, mutual funds etc. can be a good investment, but they always come with an element of risk. Some of them may limit when and how much money you are able to pull out. If you have children you could open savings accounts for them and help to secure their future.
It’s impossible to talk about finances during a pandemic without mentioning insurance. If a global pandemic hasn’t proven the worth of having good medical insurance, then nothing will. Life insurance can also help to secure a healthy financial future for your family. Life insurance is paid to your beneficiaries after you die.
It may be tempting to put off insurance payments when money is tight. Insurance should be considered as vital as emergency savings or investments. In the case of a crisis, it will stop you and your family from spiraling into financial ruin.
Planning For Future Growth
When your immediate financial health is taken care of, it’s time to start thinking about the future. This will help you move from merely surviving, to thriving.
While the global economy is still recovering, stocks have been performing well and crypto has been booming. If you have thought previously about investing, now may be a good time.
If you want to invest in stocks, finding the right broker is essential. You give them a commission on every trade that you make and they provide the orders that you purchase. These days, almost all brokering is done online. This makes investing more accessible than ever.
Many platforms have zero trading fees. There are also plenty of online resources that will teach you the basics of getting started. Some platforms offer financial education along with fractional share trading, which substantially lowers the risks involved.
Many people in the financial world believe it is inevitable that cryptocurrency will eventually replace fiat money completely. As it is still yet to hit mainstream adoption, there are huge gains to be made in this market. Cryptocurrency is built on blockchain technology, which is completely decentralized and transparent.
Plan For Your Retirement
Unless you’re living paycheck to paycheck, a retirement plan is a must-have. If you have a job, your employer might offer a retirement package as a bonus. You can also sign up to a retirement package where the money will come out of your salary automatically each month.
Retirement plans shouldn’t be a “what if”. They are essential if you want to prepare for a healthy financial future. If you are out of work, this is obviously a different story. In this case, preserving your savings should be your goal. Applying for unemployment insurance can help prevent you from using savings to pay for weekly expenses.
As the whole world adapts to the new normal after the pandemic, you should do the same. You may need to rethink your financial approach. If you have been hit by financial or health setbacks, know that there is a way to recover.
Following some of the tips in this article should help you to recover, stabilize, and plan for the future. Make sure you pay off debts and live within your means. Invest in savings and insurance to make sure you are prepared for future emergencies. Plan for your future growth by investing and having a retirement fund.