Now, as we are into the third month of living with challenges created by the Covid-19 pandemic, our concerns over personal financial health are more urgent. This pandemic’s upheaval of our lives has highlighted our financial vulnerabilities and forced many to change spending and saving behaviors.
Economic instability has left many wishing for a stronger financial safety net. At the same time, the need to focus spending on essential items combined with the absence of convenient options for spending discretionary funds has given rise to an unprecedented opportunity to experience the type of budgeting and spending encouraged for financial success.
As states begin to open more non-essential businesses and commerce begins to increase, we have an opportunity to evaluate how, or if, we return to our pre-pandemic financial habits. The time to think carefully about the direction of your financial future is now. Unquestionably, different spending habits and possibly increasing savings have become habitual the last couple months. These new behaviors are particularly important as they can reduce future financial vulnerability.
Focus On Emergency Savings
More than ever, people are realizing the importance of having a well-maintained emergency fund. Millions of people worldwide have lost jobs due to the Covid-19 pandemic. Many now find themselves struggling to pay bills. Building an emergency fund is one of the best ways to reduce financial vulnerability.
If starting an emergency fund is a challenge due to job loss, be sure to either begin saving or increase your emergency savings post-pandemic. Not sure how to build an emergency fund? Check out these tips to get your emergency fund up and running.
Buy Only What You Need
Americans’ buying patterns have changed significantly since March – focusing on purchasing only essential items and conserving cash. In most categories, discretionary spending has declined dramatically. Shopping, travel, dining and entertainment spending has decreased by more than 50%. Now is a great time to ask yourself what expenses you could continue to forgo permanently.
Revisit Your Budget
The Covid-19 stay-at-home mandates along with reduced opportunities to shop provides a good time to review your budget. Compare your essential and discretionary expenses pre and post stay-at-home orders. Consider whether the discretionary areas that have had a significant decline in spending could be permanently reduced, allowing you to shift those funds into savings.
Be Aware Of Your Finances
Many of us are now increasingly aware of our finances. Whether it’s due to intrigue over how your spending has changed or out of concern to meet financial obligations, closely monitoring your finances is a great habit to maintain. Studies show people who monitor account transactions at least twice weekly are more likely to stay on track with spending and saving goals.
The Covid-19 lifestyle has been a huge adjustment and learning experience for us all. Let one of the many lessons learned be how to better manage your finances to create a healthier financial future for you and your loved ones. Take advantage of any good habits you have recently developed and be committed to continuing them after this pandemic has passed.
Call To Action
Do you think my tips were helpful in re-directing your focus and goals? Please share the article and shout out to me on Twitter!
You can also check out my firm, LexION Capital, for more tips on how to grow your wealth and become financially secure.
Elle Kaplan is the founder and CEO of LexION Capital, a fiduciary wealth management firm in New York City, serving high-net-worth individuals. She is also the chief investment officer and founder of LexION Alpha.
Originally published on Medium.
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