The coronavirus pandemic is having a major impact on people’s daily lives, but it’s also affecting how people manage their money. With the economic uncertainty the pandemic is causing, many people are hunkering down and taking greater control of their money.
When the pandemic ends, it’s understandable to want to go out and have fun, loosening the purse strings a bit. Still, taking some of the lessons you’ve learned and financial habits you’ve built during the pandemic and keeping them after it ends can help set you up for a strong financial future.
Table of Contents:
1. Stick to Your Budget
Many people have taken the opportunity to build a budget during the coronavirus pandemic. Knowing how much money you have available each month and where you plan to spend that money is important because it lets you think about your financial priorities.
While it can be tempting to splurge a bit once the pandemic ends, sticking to your budget, even if you modify it a little, is a good idea. A budget lets you focus your spending on the things that matter to you. You can also organize your budget so that you’re paying yourself first by setting aside some money for savings each month. Making sure you spend less than you make and building a nest egg are the first steps on the path toward building wealth.
Pocketsmith is cloud-based, where you can create budgets and set-up alerts to let you know if your accounts are running low on funds.
2. Cook For Yourself
Everyone likes going out to restaurants or ordering takeout, but cooking for yourself is a great way to save money and eat healthy.
There are a lot of ways to make cooking easy and fun. With a bit of research and a run to the grocery store, you can cook almost anything you want. Trying to cook the perfect steak? Want to eat some delicious Indian food? Trying to perfect your Cajun cooking? Cookbooks and the internet make it easy.
Even if you’re too busy to cook during the week, setting aside some weekend time to do meal prep is a good idea. Invest in some good Tupperware and cook a few big meals on Saturday and Sunday. Package up the leftovers and you’ll have cheap, tasty, and nutritious food for every lunch and dinner throughout the week.
3. Skip Unnecessary Purchases
When you’re out and about or commuting to work it’s easy to fall into the habit of spending money when you don’t need to. A daily cup of coffee or a snack from the vending machine can add up quickly. With everyone stuck at home, it’s easier, and sometimes necessary, to skip these purchases.
There’s almost always room for a splurge here and there, but spending just $2.50 each day on a candy bar or other habit costs you more than $900 per year. Take the time to think about the purchases that bring you joy. Maybe you can replace the daily coffee at the local café with free coffee made at the office or you can bring a cheaper snack from home instead of buying chips from the vending machine.
You don’t have to completely deprive yourself, but avoid falling into the habit of spending money when you don’t have to and when it won’t make you happy.
4. Build and Maintain an Emergency Fund
When the economy slows down, it’s prudent to start thinking about worst-case scenarios. Building an emergency fund is a great way to protect yourself against unexpected expenses like your car breaking down or a medical bill. It’s also a great way to help you get through a spate of unemployment.
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If the coronavirus pandemic has encouraged you to open a savings account, just in case, that’s great news. Once the pandemic ends, resist the temptation to withdraw those savings and spend them on a new toy or a fun vacation. While using some of your savings isn’t the worst thing, maintaining, and growing, an emergency fund can leave you better prepared for the next economic downturn.
Many experts recommend that you should have an emergency fund equal to three to six months’ expenses. If you budget for $2,000 in spending each month, that means you’ll want to have between $6,000 and $12,000 saved away. Even starting with $500 leaves you better off than most Americans, and can insulate you against smaller emergencies. Tapping your emergency fund instead of borrowing money through a credit card makes covering unexpected bills much cheaper.
5. Keep an Eye on Your Financial Statements and Credit
With the strain that coronavirus is putting on many people’s finances, it’s easy to find yourself watching your bank and credit card statements like a hawk.
While you probably don’t need to check your accounts on an hourly, or even daily, basis, keeping a regular eye on them is a good idea. Watching your bank and card statements helps you track where you’re spending money and make sure you stay in your budget. It also helps you spot fraudulent purchases, rectifying the issue before it’s too late.
You can automate much of this process, setting alerts so that your bank texts or emails you when your balance falls too low. Doing this now can make it easier to monitor your accounts when the pandemic ends and when you have less free time to spend at home.
Keeping track of your credit is also important because your credit score can make the difference between getting approved for a loan or not being able to borrow money at all. Even if you do get approved, having good credit can help you save a lot of money on interest.
Take the time to check your credit report using any of the vast number of free options available online. If you see any mistakes, reach out to the credit bureaus to get them removed. You’ll be well-positioned to borrow money if you need to, once the pandemic ends.
Keep checking on your credit regularly so you can track its improvement and remove any errors as quickly as they appear.
6. Start (or Keep) Investing
Historically, the most important thing for investors is the amount of time they have their money in the market, not their ability to time the market’s rise and fall. If you have the extra cash to invest during the pandemic, you’ve been able to buy shares well below the market’s all-time highs.
While no one can predict the future, the odds are good that sometime after the pandemic ends, the market will start to rise again. Don’t let rising stock prices discourage you from investing. Consistent investment over the long-term is almost always an effective strategy for building wealth. If you’re worried about losing money by buying stocks just as they reach their peak, read the inspiring story of the world’s worst market timer (who does quite well for themself).
7. Call Your Creditors to Reduce Interest and Fees
Many banks and lenders are offering relief to borrowers in light of the coronavirus’ economic effects. Some are waiving fees and reducing interest rates, or giving borrowers extra time to make their payments. If you’re in a tough spot, you can call your creditors to see if they can help you out.
Once the pandemic is over, don’t be afraid to call a creditor or your bank if you’re struggling with a bill. Even during normal times many banks or lenders will waive fees for the first late payment you make or be willing to work with you in other ways if you’re struggling to make a payment.
8. Keep Your Less Expensive Hobbies
With many Americans staying at home practicing social distancing, many people have found new hobbies or rekindled old ones. Whether you’ve discovered a love for reading, knitting, cooking, bodyweight fitness, writing, or anything else, don’t let the end of the pandemic stop you from enjoying your hobbies.
Many of the hobbies you can practice at home are inexpensive compared to things like going to bars, visiting an expensive gym, or going to the movies. You don’t have to cut your more expensive hobbies out of your life, but enjoying the less expensive hobbies too can help you keep some cash in your pocket.
9. Avoid Bad Debt
Debt is a normal, and even healthy, part of everyday life. Few people would be able to buy a house without a mortgage and even credit cards–when properly used–let you earn valuable rewards at no cost.
However, bad debt, such as expensive personal loans, long-term credit card debt, or even payday loans can be incredibly expensive and trap you in a cycle of debt. With spending down because of social isolation, avoiding bad debt might be easier than usual. Once the pandemic ends, be careful not to spend more money than you have. Keeping yourself debt-free is essential if you want to keep your financial situation healthy for the long-term.
The outbreak of coronavirus is stressful for almost everyone and people have had to change the way they live quickly and in drastic ways. The pandemic also offers an opportunity to assess your financial situation and how you manage your money, as well as a chance to build new habits that set you up for financial success.