Financial priorities have drastically changed in the last year mostly because of the health crisis. The pandemic swept through the nation and the entire world. It challenged all the basic principles people have lived by in almost every aspect of life. From your health to the way you manage your relationships. And even how you prioritize your finances.
Since the pandemic forced a lot of companies to either slow down or close down, income for many American families drastically went down. From being furloughed to being let go, earning money was not harder than it was prior to the health crisis. Though there were stimulus checks being given out, a lot of unemployment benefits are slowly being put on hold in a bid to restart job recruitment again.
This is a tough time for a lot of people especially when they have to realign their financial priorities. But it was necessary to take a look at your finances and determine how you can make the most given the current economic situation. You might have heard that one of the constant things in life is change and your finances are not exempted from this.
The past few months have been a roller coaster of a ride, to say the least. A lot of adjustments had to be made with your budget and your finances. Here are some of the areas in your finances that could have seen the biggest change due to the health crisis. It would be good to take a look at them and determine if you are focusing on the right areas in your finances.
Lean household budget
Financial priorities that have changed due to the health crisis can be seen in your budget. This is especially true if your job situation took a hit because of the pandemic. If your income is not the same as before, then you cannot be spending money just like before. You have to make changes in order to meet and cover all your expenses every month.
The good thing is that your budget is and should be flexible. But now you ask why do you need to have a budget when it can keep changing? Well, you need to have a baseline and a guide so you can have a quick overview of your finances. At any given time, you need to be able to tell how much you are earning and where you use it.
When your income is negatively impacted by the health crisis, you need to adjust your expenses. This means that you have to take a hard look at your current budget and scale down. A leaner budget is where you are able to make do with a lower income. Usually, this means that you cut down on several expenses to make ends meet.
One of the financial priorities that you took the spotlight at the height of the health crisis is your emergency fund. A lot of people started looking into it as their work was drastically cut down by the n closure of several businesses. All of a sudden, they needed to use their reserve fund to help them pay for their needs.
Prior to the health crisis, a lot of Americans did not care much about emergency money. It was not a priority simply because bills and expenses were overtaking their income. But now, you might have seen the real value of having some cushion fund you can tap into when push comes to shove. This is a lot better than having to take out high-interest loans just to get by.
One key factor in saving for emergencies is to focus on the habit in the beginning. This means that you can start with a small amount. As long as you build up the habit of setting money aside for emergencies. You then slowly increase the amount in proportion to your income’s growth over time. Soon, you will not notice it but you unconsciously save for your emergency fund every single month.
Financial priorities also changed when it comes to making and managing existing investments. For those who are just about to start, it might seem like a scary time to start. Others might feel it is too risky and prefer holding on to their income. That may be true since you never know what will happen tomorrow. But the same line of thinking is what should push you to invest as well.
Before you do, it is important that you understand your risk tolerance so you can invest an amount you are comfortable with. When it comes to investments, there will always be risks involved. You need to make sure you understand this and will be comfortable with the downside of investing. But when it comes to investing, it is not always about money.
You can also invest in yourself and upgrade your skills. This will help you broaden your employment options. One thing to consider is upgrading your skill to advance in your industry. You can also learn a new skill and pivot your career to something in demand. This will help if your current career is unable to recover from the health crisis. Forbes shares that you would need to invest and time even stretch yourself to find opportunities when investing and upgrading your skills.
Healthy mind and body
Investments are not just about skills, just financial priorities do not only revolve around money. The health crisis should have underscored the immense value of a healthy mind and body. The virus was deadlier for people who did not put a premium on their health. And this is one area in your life you have control over.
Health is a decision you need to make every day of your life. It starts with the food you eat and the exercise that you do. The more you eat healthier food, the stronger your body gets. The same goes for exercises. You need to give your heart and your muscles a good workout to keep them in top shape. The healthier you are, the more your body is able to fight off sickness and disease.
You should also make sure that you are mentally healthy as well. This is equally important in today’s time. With people losing their jobs, depression is starting to affect a lot more people. It is not easy to constantly worry about your next meal or how you will meet next month’s rent. Be sure you have a way to manage your mental stress as well.
Spending for experiences rather than material pleasure
You might have noticed a change in the way you spend your money at the height of the pandemic. In the past, material possessions might be a benchmark of the quality of life you have. But when finances got tough, you suddenly find yourself spending more time with the people that you love. You begin to understand that time with the people you love is far more important than material things.
Many financial priorities changed over the past few months because of the health crisis. The effects of the pandemic opened your eyes to what is important. This helped you realign your finances in a way that your priorities shifted around. Just make sure that your current priorities will continue to help you reach your long-term goals. If there are any changes with your goals as well, keep in mind that what you prioritize now should get you to your new goals in the future.