There is no doubt that the pandemic upended a lot of your plans and changed the way you manage money as well. But are these changes for the better? Or are you digging yourself deeper in debt?
The health crisis came and swept through the country and the whole world putting world economies under extreme working conditions. The problem was not contained in the health industry. It forced world governments to manage all aspects of their economy just to keep it going. In the US, stimulus checks were sent out to families to help them get by.
This was due to businesses and companies letting people go to scale down operations or because they are closing down. The health crisis forced a lot of people to stay indoors drastically reducing foot traffic in commercial areas. As a result, a lot of businesses especially brick and mortar shops were forced to close their doors simply because customers are not coming in.
All these would affect the way you manage money regardless of where you are coming from. You can be a business owner who is trying to keep your shop afloat and your people employed. If you are an employee, you could either be working at home, on furlough or let go as well. These changes could have forced you to make necessary changes in the way you handle your finances.
Changes can be good
Change can be a good thing if it pushes you to become better. Being different is not always a bad thing especially if it helps you to grow. Oftentimes, your mindset plays a crucial role in the way you handle changes in your life. Dave Ramsey explains that mindset is your unique set of beliefs as well as attitude towards money. It helps to acknowledge these changes as well to help you move forward and assess how they can help you with your finances. Here are some of them worth looking into.
One of the most prominent changes in the way you manage money brought about by the health crisis is your preference for online transactions. With the stay-at-home orders being brought down in several states, you were forced to conduct your transactions online. More than just working online, you could be purchasing your needs online as well.
The pandemic could have forced you as well to get to know online banking a lot more. Apart from the usual monitoring of your account balances, you might have started with an automatic transfer service from your bank. This is to ensure that you are able to save for your emergency fund just in case another crisis hits.
Reviewing recurring charges
The health crisis could have forced you to take a second look at the way you manage money and your expenses are a big part of that. If your income is affected, you begin to find ways to cut down on costs in a bid to preserve whatever income you have coming in. You could also be trying to stretch your savings over a few months to help make sure you can cover all your basic needs.
When you begin to pull a tighter rein on your expenses, one of the first places you look into is your credit card use. Once you do this, it helps to go over all your recurring expenses if you haven’t done that already. There is a good chance that you might find small recurring payments you have been making in the past few months.
Recurring payments slip through
The reason it has slipped past your radar is that some of these recurring payments might be too small to matter. They can be for a magazine subscription, new subscription, or even for a gym membership you have not used in the past months. It is a good time to look over these expenses and assess if you can do away with them even for the time being. They might be small but when you add them all up over a few months, you could save a good amount of money.
Price check and comparison before buying
In the past when you needed to purchase a specific item, it was enough to know what specific brand and where you can get them. It did not matter much what the price tag was when you get to the store as long as it is within the ballpark amount you had in mind. But nows, things could be a lot different. You could be looking at the exact amount of items you need to buy and this is one of the changes you will come across now as you try and manage money in the time of a health crisis.
Now, not only will you check the exact amount of the item you need to buy, you will take it a step further. You could have started to compare prices from one store to the other. Your goal is to find the item with the lowest price. At a time where every dollar counts, you want to make sure that you save on your purchases.
Frugal vs Cheap
But as you do this, remember that there is a fine line between being frugal and being cheap. One is quite different from the other. When you are buying things you need, price is a big factor but you need to look at other factors as well. Quality is one of them and it follows that the better the item, the more expensive it gets. You need to carefully balance your budget versus the quality of the item you are buying.
Saving money online
When it comes to changes in the way you manage money during the pandemic, one of the biggest changes in the way you save money. For one, the health crisis underscored the sheer importance of having a cushion fund for extreme situations. It is not an easy task to try and buy groceries when you have lost your job or even put in fewer hours at work. CNBC shares that your emergency fund is meant for unexpected expenses.
A lot of people understood the importance of having a reserve fund meant to help you get out of a tight financial situation. This is the reason why you might either be starting to save for one or looking for a way to strengthen what you have already started. Setting money aside now becomes a normal thing you do every payday.
One of the easiest ways to do this is to automatically have a specific amount transferred from your paycheck to a nominated account. As explained earlier, this is a lot more efficient helping you save time in the process. Even before you start to think of ideas where you will spend the money, you automatically transfer it before you unnecessarily spend it on wants.
More than just saving for an emergency fund, you could have started thinking more seriously about your future needs such as retirement. This is the reason why you could have started venturing into investments to help you reach your future goals. One of the great concepts you can use to your advantage when it comes to investments is compound interests.
This is where you are able to earn interest on interest over a long period of time. In fact, this is a big reason why you would notice some finance professionals urge people to start investing and saving as early as possible. The earlier you save, the longer your money gets the chance to grow and help you save for the future.
The health crisis is still on-going and this could have forced you to reassess the way you manage money. If this is the case, focus on how you can make improvements to help you get out on top.