Re-acclimating to normal life as pandemic restrictions lift and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap- you’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.
Here are some forward-thinking money moves to make as you adjust to post-pandemic life.
Review and Adjust Your Budget
The pandemic times required their own budget. As people cut down on costs like dining out and shopping for new clothes, they suddenly started to spend more on things like at-home entertainment. Others may have had to adjust spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted things around on people’s mental list of needs and wants, as they found they can live with a lot less than they previously believed.
As you adjust to post-pandemic life, take some time to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as any adjustments to pre-pandemic spending and priorities. You may need to review and adjust your budget, and possibly your spending behaviors, every few months until you find a working balance.
Rebuild your savings
If you are one of the many Americans who were forced to dip into savings, or even to empty them completely during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income Or, you could use a windfall - such as a work bonus or tax refund - to get the bulk of your emergency fund in place.
Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it is always best to be prepared, because you never know what may happen.
Rethink your Short- and Long-Term Financial Goals
The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car.
Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly.
As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can.
Spend with Caution
It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but, as always, it’s best to spend with caution.
First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting a bit until prices cool off.
Also, you may be eager to make up for lost time but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned.
Restaurants and movie theaters are open for business again and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here.