We can probably all agree that this has been…a year. One that has presented various challenges for us mentally and emotionally and, for many, financially.
The pandemic has changed our way of living and has led many people to reevaluate their financial priorities. More than one in three Americans say they have been saving less since the pandemic started. And unfortunately, another one-third say they have turned to their savings or retirement accounts just to pay their bills (Pew Research).
You’re not alone if you’re feeling a bit financially unprepared during these times. Because life as we know it has become more complicated, we want to share a few financial tips to help you weather this year and beyond—regardless of your financial situation.
Use this time as an opportunity
Let’s start with creating a mindset. You may have made totally different financial choices before COVID, and maybe you feel guilty for not being more prepared. Channel those feelings into something more productive by resolving to take an active role in your financial life and make better decisions moving forward.
Create a strategy
Build a new budget strategy for your “new normal.” It may help to break things down by thinking on a per-spending basis, like setting a spending limit for each time you get groceries instead of for the whole month.
You can also separate your money into categories by giving it different labels: necessary bills, current weekly expenses (like groceries), and long-term costs (like your retirement fund). This can help you get a clearer picture of your finances and prioritize what’s most important.
Don’t get carried away by emotions
We’ve said it before and we’ll say it again—if you’re thinking of pulling out or jumping into the market now, you may want to think differently. History has shown us the market tends to bounce back over time. While past performance is never a guarantee of future performance, it is an important fact to consider before making any major financial decisions. If you do move your money, consider whether any interest you make will keep up with the cost of inflation. It may be worth working with a financial advisor for some guidance. We can help. Visit our financial planning page to view your options.
Keep your credit score up
In the future, there may be opportunities to refinance mortgages, student loans, and auto loans at lower rates. You’ll need to maintain a high credit score if you want to save some money on interest—which is just as important to your finances as what you gain in investments or dividends.
If you have credit card debt, student loans, or medical debt, it’s ok to hit pause for now and make minimum payments if you need to—making at least the minimum payment is crucial to keeping your credit score up. However, before you decide, determine if the interest you’ll be charged is worth the wait.
Continue saving for retirement if you can
If you’re newer to the workforce, you may not think this is important—but it is. The earlier you save, the more you take advantage of compound interest. And if you’ve been saving for a while, keep at it—or at the very least, decrease your contribution temporarily but increase it again as soon as you can.
Consider life insurance
The pandemic has been a grim reminder about the importance of having life insurance. It is an essential part of a holistic financial plan. Visit our life insurance pages to learn more and get free quotes.
Build some routines
When we’re stressed, we seek comfort. Find some free or inexpensive new routines to bring back some stability and enjoyment. It could include staying (virtually) connected with friends and family, exercising, cooking, trying a new hobby, or resurrecting an old one.