The global spread of the COVID-19 virus has dramatically changed the lives of millions. As countries impose nationwide lockdowns for public health safety, many companies decided to lay off or furlough their people—putting a dent in many household incomes.
Thankfully, things have gotten better. As vaccines continue to roll out and businesses reopen, there are also more job opportunities. But even if many individuals are reentering the workforce, some people find themselves far from their personal financial goals. If you want to get your finances on track now that the economy seems to be making a comeback, here are some tips you can follow.
Assess Your Financial Plan
With the various changes you’ve gone through during the pandemic, your financial behavior also got affected. Losing your job could have made you live a minimalist lifestyle. Maybe being stuck at home led you to less extravagant food choices. Such changes can also impact your goals, wants, and needs. This is why you need to reevaluate your financial plans post-pandemic. Before you enhance your finances, you need to assess what you want to achieve in your life by asking vital questions like:
- What are your short-term goals?
- What are your long-term objectives?
- What kind of lifestyle do you want moving forward?
- Do you prefer to work from home full-time or are you open to hybrid working arrangements?
- How much savings do you want to set aside for your retirement?
Adjust Your Budget
Once you have a clear view of the kind of post-pandemic life you want, it will be easier to make adjustments to your finances. As you do this, remember that your spending and income are aligned. Aside from covering essential expenses, you must actively find ways to conserve cash. For instance, you can take advantage of different buy one get one free deals in grocery stores and reduce discretionary spending. Discretionary spending can be in the form of sudden shopping sprees, a new gadget, or unnecessary subscriptions.
The pandemic can also bring new saving opportunities. For example, if you are working from home, then you no longer have to spend as much on daily travel and eating out. This will provide you with extra savings you can put to good use. You can either use the money to save for your retirement or as part of your emergency fund. Additionally, revisit your budget regularly. Revise any plans and implement changes to make sure they are always aligned to your changing wants, needs, and economic status.
Invest in Life Insurance
If there is one thing the pandemic has proven, it’s that life is truly uncertain and unpredictable. Many people all over the world succumbed to the COVID-19 virus and left some families without their breadwinner or primary caregiver. A lot of individuals saw the importance of purchasing life insurance, and you should carefully analyze the policies before getting one.
A way to get a good policy is to assess the financial gap that would be left for the survivors if a person passes away. This gap is the amount deducted from the household income when someone dies. It is also the amount of coverage the survivors would need to stay financially secure. As soon as you have calculated the financial gap, check your current life insurance or get one that will provide adequate coverage.
Build an Emergency Fund
When the pandemic hit, more people became more conscious about their physical and financial health. To protect finances from unexpected events like job loss and lockdowns, you need an adequate emergency fund that will cover your essential expenses. Ideally, you should have between six months to a year’s worth of family income as your emergency fund. But if you are still financially struggling to meet this benchmark, you can start with a small monthly amount. By slowly building your savings, you have something you can fall back on in case you encounter a financial crisis.
Live Within Your Budget
As life is easing back to pre-pandemic activities, you need to carefully monitor your spending and make sure you are not going beyond what your budget allows. Over the last year, when people were forced to limit their spending drastically, whether from job loss or because they were stuck at home, people became used to keeping their expenses to the minimum. However, as the world starts to reopen, people may begin to get excited to experience all the things they have missed—which can lead to overspending.
To make sure you stay within your budget, allocate part of your income to the things you want to spend on. For example, if you want to increase the time and money spent on dining out, look into reducing your spending on other things like online shopping.
If you lost your job during the pandemic and survived on loans and credit cards, you need to put your focus on repaying your debts as soon as your income starts to come back. As you settle debt payments, you might end up with less of a budget for leisure activities. You also need to account for this and make adjustments to your personal expectations.
The global pandemic has drastically affected the lives of many people’s financial status. Fortunately, the economy is making a comeback with more businesses reopening and individuals getting inoculated. As you find ways to improve your finances, assess your present wants and needs as well as what you aim for in the future. This way, you can make the financial adjustments that will support the kind of life you want.