6 Ways to Make the Post Pandemic Transition Easier on Your Finances

The Covid-19 Pandemic isn’t over yet, but with vaccines rolling out across the country, the end may be in sight. As states begin to reopen and the world is figuring out what the “new normal” will look like, it’s important to think ahead financially. After long months of lockdown, everyone is eager to go out into the world and enjoy new things, but we need to be wise about our spending habits.  As things like travel, dining, and public activities become available to us again, now it’s a great time to look at and update your budget! Here are some steps to do so:

1. Review your current financial situation

For most people, the pandemic affected their finances one way or another, either because they lost income or saved money by staying at home. Some individuals have adopted costly habits to cope with the pandemic such as online shopping or taking takeout dinner more frequently. As things are going back to normal. Now is the time to step back and review how your financial situation has changed in the past year.

2. Review your pandemic habits

 Covid-19 resulted in new habits for most of us. As some combination of fear, boredom, stress, and anxiety plagued nearly every individual this past year, it’s likely that you added in at least a few new expenses to help you cope with the situation. Whether you increased your entertainment subscriptions, found a new crafting or gaming hobby, became a fully blown chef or sour dough connoisseur, or turned to retail shopping to fill time and tamper nerves, all these activities can be expensive in the long run. Now is the time to identify all of these behaviors and figure out which ones are purposeful and worth keeping, and which ones to scrap.

3. Click-and-buy less

A prominent spending habit that many consumers developed during the pandemic was buying stuff online because we couldn’t just get to the store so online shopping became the next big thing. The biggest problem with shopping online is that most of us are buying things we want, but don’t necessarily need. Removing shopping apps from your phone is a good strategy to reduce online shopping.

4. Build emergency savings

The pandemic was particularly difficult for those with no emergency savings. Make building or rebuilding your emergency plan a priority as the pandemic winds down. If your budget barely covers basic expenses, look for other sources of money that could be used for savings, such as stimulus money or a tax refund.

5. Restructure your savings and debt repayment plan

As things shut down in 2020, so did certain savings and debt repayment goals. You may have decided to pause savings for travel or found that your federal student loan payments were postponed, and therefore had more money to send elsewhere. Maybe you reallocated these funds to high interest debt, such as credit cards, toward fully funding your emergency savings, or even towards creating a home office. But now’s the time to reinstate savings and debt repayments for your ideal “new normal!”

When setting savings goals, try to be as honest with yourself as possible! For example, when creating a travel savings bucket, do you see yourself taking local road trips or dusting off your passport the second borders reopen?

And if you’ve gotten used to life without student loans or any other debt that may have offered temporary relief, it’s time to practice your payments. Simulate payments to either a savings goal of choice or another debt you are tackling by making a transfer for the same amount as your minimum payment. This is particularly important right now, so you don’t get used to having an extra $100 or more to spend on friends’ gatherings and other recently rediscovered activities!

6. Estimate future expenses, have fun, but don’t go crazy

Consider what your expenses will be in the months to come and weigh that against your current income. If you think you'll have a shortfall, don't wait to make changes. Start adjusting your spending now to ensure you can more easily transition to your expected post-pandemic lifestyle.

People have pent-up demand to spend on things that they haven't done for a while, like eating out, attending special events and, of course, traveling. There is going to be a desire to break out and go all out, but it is best to plan and go back slowly without going crazy. Make sure you have a real plan to pay for entertainment expenses and avoid going into debt for them.

Lastly, the prospect of the world reopening (slowly, but surely) is both exciting and a little bit nerve-wracking. As we remember how much fun it can be to see friends and family on a more regular basis, it can be easy to swipe all things financial under the rug. Having a plan and a way to check in on it is the first step to making healthy financial decisions and avoiding financial anxiety. So whether you cut expenses, restructure your savings, practice debt payments or not, make a plan and stick to it!

FInancial impact of covid-19        UnDerstanding and managing  anxiety

 

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