Creating Your Post-Pandemic Budget
As vaccinations continue to roll out and restrictions loosen, our saving and spending may revert to our pre-pandemic ways. Here are some tips to look ahead and plan your post-pandemic budget.
First, ask yourself: “What changed?”
• We spent more on eating-in than eating-out
• As we nested-in-place, we discovered our homes and apartments needed improvements
• Many explored home fitness experiences or experienced the great outdoors through hiking and walking
• We spent less on commuting costs and vacation travel
• Many Americans may have discovered home technology needed an upgrade to support WFH and remote learning
• Many saw reduced work hours, income, or even lost jobs as a result of the pandemic shutdowns
Next, we need to determine: where do we go from here?
1. Keep the good.
Were there things that resulted from the pandemic that had a positive effect on you, your family, and your finances? Many gave up the health-club for a home workout. Pocket the savings. Did you discover (or rediscover) a love for home-cooked meals? Will you go out to eat as much? Or will pocket the savings?
A recent survey from COUNTRY Financial revealed that 76 percent of Americans say they gained or further developed at least one personal finance skill this past year.
2. Re-prioritize your goals.
The pandemic and resulting shutdowns were far from anyone’s wildest imaginations last year at this time. An event like 2020 may not be the last. The value of a solid emergency fund can’t be underestimated. If yours is looking a little meager, commit to putting some of this year’s tax refund, subsequent stimulus checks or a few dollars out of each paycheck into a savings account – and don’t touch it. Most experts recommend at least 3-6 months of essential expenses.
3. Don’t boomerang into G.O.A.T.
Many of us have lived with restrictions in dining-out and travel for nearly 12 months or more, so it’s understandable that we are excited to G.O.A.T. – Get Out And Travel (e.g. vacations, cruises, etc.). Don’t boomerang and lose sight of your goals.
4. Write down what you want.
If you’ve saved money during the pandemic and have pent up spending desire, a good exercise is to write down what you want and choose one thing to buy. Writing it all down still lets you experience it and helps satiate that need to spend.
5. Use cash instead of credit.
If you and your family have been dying for some care-free in person retail therapy, an exercise that works well to control spending, especially with kids is to use cash instead of paying with a credit card. It’s easier to see the value of money when its tangible and we tend to spend less.
6. Preserve your cushion but give yourself some grace.
Holistically, the job economy is scary right now and the retention of your job is important. If you’re at a point where you want to make a move, make sure you have choices and have saved up at least 3-6 months to give yourself some breathing room. If you have 3-6 months (or more) worth of living expenses saved up, its ok to splurge a bit and go out to a fancy dinner post-pandemic, but with caution.
7. Make sure your buckets are filled.
Leverage online money tools and make sure your buckets are filled, including retirement, 3-6 months savings, life insurance and emergency fund. Think accumulation and protection, even on income.