Rebuilding your finances after the pandemic
The pandemic hit finances hard for many, even if you weren’t laid off from work, the rising costs alone are enough to disrupt your finances.
Now is the time to re-evaluate your finances and get yourself back on track.
Number 1 – Emergency savings
If you didn’t have an emergency savings prior to the pandemic, you probably see the importance of having one now. Having an emergency savings should be top priority for everyone.
Many suggest three to six months of income as a rule of thumb when it comes to the amount that should be stashed away in your emergency fund. However, the pandemic lasted a lot longer than that and it has many rethinking the amount that should be set aside.
For now, three to six months of income in your emergency fund is a good place to start.
Number 2 – Debt
A part of every financial plan is debt. Many during the pandemic had to add to their debts to stay afloat. If you ended up a few thousand dollars in the hole, remember, it’s something you will have to pay off.
Come up with a strategy to pay off your debts, whether it’s cutting out the high-interest debt first or focusing on the easiest debt to pay off.
Having both an emergency savings and paying off debt are the top 2 things that everyone should have or at least be working towards. If you want to pay off debt first, save first, or do both simultaneously, it generally doesn’t make a difference. If you can afford to work towards both, do it. If you can’t, work on one at a time.
Number 3 – Your post-pandemic budget
As you re-enter the world post-pandemic, be careful not to overspend due to your excitement. If you have extra funds to allocate towards doing fun things, make sure you set aside a specific amount for this to protect yourself from overspending. This is especially important for retirees to do if they are living on a fixed income.
Inflation is a huge reason we need to update our budget. We will see increases in the cost of food, shelter, gas, and the list goes on. We need to make sure to set aside extra money in the budget to account for inflation.
Number 4 – Financial Goals
Before the pandemic hit, many probably had set long-term financial goals. Such as, buying a house, a car, a boat, or retiring.
If you had a long-term goal, you might want to look back at it and re-evaluate. What happened during the pandemic could have changed your timeline to obtain your goals and that’s completely okay. You might need to push things back a little bit, stay on track and you will get that goal of yours!
Just remember, it took us over a year to even see the end of the pandemic coming near, getting your finances back into order will take some time also. What worked before, might not work now.
Getting yourself back together after the pandemic, especially if you were a harder hit individual, is going to take time. Don’t rush it. Stick to your plan, even if some long-term goals were postponed a year or so.
*Information taken from an article on CNBC*
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