How to Prepare Your Finances for a Post-Covid World
3 min. read
By: FCU Team
The past year presented a new normal, from the way we work to the way we socialize and everything in between. Changes have also transformed our spending or lack thereof. Entertainment, leisure activities and dining out were stripped away from monthly budgets. Instead, activities like virtual game nights paired with homemade cocktails became the new weekend “outing.” Fortunately for many, this new way of life offered new opportunities to save. Now that we’re warming up to the idea of a COVID-free life, it’s important to get a grip on your finances before the urge to spend kicks in.
Analyze Your Current Financial Standing
Your finances may have been riding the wave of the pandemic right alongside you. Whether you took some hard financial hits or you’re experiencing a new financial high, it’s important to brace yourself for the impact of the post-COVID life. The first step to preparing your finances for the economy’s reopening is to analyze your current financial standing. How much have your savings grown in the past year from eliminating monthly expenses? What’s your new monthly spending average?
With many businesses transitioning to work-from-home, opportunities to save have been big. Monthly gas expenses decreased along with the wear and tear on your car. Work lunch expenses are minimal, and the need to expand your professional wardrobe is reduced or nonexistent. Take this opportunity to go through your accounts and see where you save, where you spend and the status of any debt you carry. This financial assessment should give you an understanding of how much you can continue to allocate to your savings while making room in your budget for dining or entertainment.
The Financial Wellness Widget in Florida Credit Union’s online and mobile banking can help make the budgeting process easier by presenting information gathered across all of your accounts and separating your spending into categories like bills, dining, entertainment, health and more. Choose to set limits on your spending based on categories or use it as a tool to observe your monthly spending habits. The more you’re aware of your finances, the more likely you are to cut back.
Small Changes for Big Savings
The key to preparing for a post-COVID life is to prepare for the inevitable extra spending. This doesn’t mean you have to make drastic changes to your budget or take on a side hustle to juggle the new normal. In fact, it’s as simple as making small changes that lead to long-term improvements. Here are a few ways you can prepare your finances for the upcoming changes.
Stick to Dining In
One category that saw a change during the pandemic was food spending. With restaurants and bars shut down for months during the quarantine peak, many opted for home-cooked meals to get them through the lockdown phase. Eating at home became a necessity but also a financial benefit. So, set a goal for yourself and limit the number of times you dine out per month to keep savings going strong.
Eliminate Your Least-Used Monthly Subscription
We’re all guilty of being subscribed to one too many things. Whether you’re aware of it or not, subscriptions are automatically withdrawn from your credit card or account every month. As the economy recovers, it may be time to ditch some of those at-home entertainment subscriptions that will lack use in a few months. Whether it’s a streaming service or a monthly food kit, reevaluate your subscription list and eliminate the least-used services.
Plan for Your Next Emergency
Just because we’re recovering from one crisis doesn’t mean another isn’t on the horizon. Always expect the unexpected, and make sure your finances are equipped to take on what’s ahead. Now is a good time to reflect on the past year and ask yourself how you could better prepare for your next emergency. Before you spend aimlessly in the coming months, consider opening up a savings fund and set small goals until you reach at least three months of living expenses.
Nurture Your Mental Health
For a lot of people, money can be connected to their emotions. Whether it’s a stress trigger or cause for celebration, emotion can lead to binge spending. During these uncertain times, many are finding comfort in shopping. While a little retail therapy is well deserved, it’s also important to know when to fight the urge. Take small steps to improve your mental health and look for other ways to fill your time. Take on a new hobby or take a break from doom scrolling on social media. An improvement to your mental health can lead to an improvement in your financial health.
Prioritize Saving at Any Opportunity
Over a third of Americans say they’ve prioritized their savings now more than before the pandemic. Fight the temptation to spend as the economy recovers, and put your savings toward long-term goals like buying a home or saving for retirement. By using a budgeting app or making a few small changes to your monthly spending, you can ease back into normalcy and enjoy your weekends without sacrificing your savings. Looking for extra guidance? Contact us or talk to an FCU Member Service Representative at 800-284-1144 to get started.