By all accounts, we are turning the corner on the pandemic, and the economy is in a secure rebound. So, with the economy improving and most of the issues with COVID-19 in the rearview mirror, what personal finance moves should you be making right now?
Here’s what the experts recommend people focus on as the economy reopens and recovers.
Rebuild emergency savings
Too many people were caught with unexpected job loss during the pandemic and learned the hard way about how important it is/was to have emergency savings. If you did not have enough of them, or if you had to deplete them during the worst of the pandemic, now that things are on the upswing, you should resecure your emergency fund before spending on anything else.
“The best financial practices pertain through bad times and good,” said Mark Hamrick, senior economic analyst at Bankrate. “We’d strongly counsel to make emergency savings a priority.”
A rule of thumb followed by many financial experts is that people should have three to six months of living expenses in an emergency savings fund. But 13 months into a pandemic that’s left millions unemployed, people may be rethinking their savings goals.
Pay Down Debt
Similarly, now is the time to pay down any additional debt you may have accrued during the pandemic. Many Americans were forced to dig into credit lines or pay less towards monthly credit card debt to make ends meet during the pandemic. Now is the time to try to pay down that additional debt or go back to making the level of payments you were making before the crisis.
Take Another Look at Your Long Term Financial Goals
As the virus wanes and the economy improves, now is the time to reassess long-term financial goals that you may have had to put on hold during the worst of the pandemic. The past year set millions of Americans back in many ways, and for some, that meant pushing off milestones such as buying a house or car or even delaying savings for retirement.
“If they were hammered by 2020, they may have to push out retirement for a couple of years; that’s OK,” said Tania Brown, CFP and coach at SaverLife, a nonprofit focused on saving. “They may have to get some of those financial fundamentals taken care of first.” Even as the economy recovers, however, getting back to pre-pandemic finances won’t happen overnight, according to Brown. And, people should be aware of that and adjust their expectations accordingly.
“What worked in 2019 or even 2020 may not work now,” she said.
How about you? What is the first financial move you plan on making now that the worst of the pandemic is behind us? Please reply using the comments below!