Managing Money in a Post-Pandemic World
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Make no mistake: the COVID-19 pandemic of 2020 wreaked all kinds of havoc on the finances of Americans and others around the world. From jobs lost to raises deferred and companies decimated, the coronavirus pandemic was difficult to weather. Emergency savings were wiped out, consumers stayed unemployed for months, and prices for important necessities spiked—you lived through it, so you get the picture.
While the coronavirus is still floating around, thanks to vaccines and a large portion of Americans having the disease at least once, things are a bit more stable in 2023 when comparing the year to the pandemic. At the same time, many people are still emerging from the pandemic with their finances in disarray. Whether you made a career change that resulted in less income or are finding your living expenses costlier due to inflation, there are still ways that the lockdown might be affecting your personal finances.
For many, the financial decisions they made because of the coronavirus were influenced as much by survival. As such, it’s a great time to look at your current financial situation to determine what’s working and what could be improved. Keep reading for some tips and strategies to audit your finances and rebuild a strong financial foundation moving forward.
In this article
Assess your financial situation
Due to the financial stress of the pandemic, certain aspects of your finances have likely gone on autopilot. On the other hand, the coronavirus pandemic was a watershed moment for many people, leading them to re-evaluate what they value in life and the lives they want to lead. It makes sense that your financial goals may have changed, too. Here are a few helpful steps to take as you audit your current financial situation.
Analyze your income
The amount of money you make each year—specifically, each month—is an important aspect of assessing your finances. This may seem obvious, but with so many people’s jobs or salaries being impacted by COVID, it can be easy to be grateful to have a job, much less one that pays well.
When looking at the amount of money you have coming into your bank account each month, you’ll want to review all sources of income. This starts with your salary or hourly wage but might include performance-based bonuses, investments, and any money from side hustles. Having a clear picture of your monthly income allows you to better account for the mixture of necessities and wants you to spend your money on each month.
Track expenses
Just like knowing how much money you have coming in each month, it’s equally important to understand what you spend in a given month. Of course, some months will vary (hello, wedding season!), but having a general picture of your consistent outflows can help you determine whether you are making enough money to support your existing lifestyle.
Whether you use a pen and paper, create an annotated spreadsheet based on your bank statement, or use one of any budgeting apps (shout out to YNAB) is up to you. The important thing is that your outflows are less than your monthly inflows. Ideally, your outflows are less than your inflows, and you still contribute to your retirement savings and a monthly savings account.
You may be living paycheck to paycheck if you overspend or barely break even each month. Remember that nearly 90% of Americans live paycheck to paycheck, even those making six-figure incomes. This is partially fueled by credit cards—something we’ll get to in a bit.
Should you discover that you’re frequently overspending or barely scraping by each month, it’s important to take stock of this and try and get to the bottom of what is causing these problems. Making a budget will help you rein these behaviors in.
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Calculate your net worth
Looking at your net worth can be a healthy (albeit frightening) motivator for cleaning up your finances. To calculate your net worth, you’ll want to take all your assets and subtract the total number of debts from that.
Keep in mind that your assets aren’t forecasted based on your annual salary. Instead, you’ll want to total money in the bank, including from sources such as:
- Checking accounts
- Savings accounts
- Cash
- Retirement accounts
- Investment accounts
- Real estate
Some people choose to list the value of their car in their asset list; however, keep in mind that vehicles are depreciating assets. As such, you may not want to include it as an asset—although that is totally up to you.
You’ll want to total a few different categories when listing your debts. A website like Credit Karma can help you quickly organize the bulk of these in one area; however, you may need to dig a bit more to get a comprehensive list. Make sure to include debts like:
- Credit card debt
- Student loans
- Auto loans
- Mortgage
- Personal loans
- Tax debt
- Medical debt
After you’ve totaled each category, you can subtract your debts from your assets to see if you have a positive or negative net worth. This can serve as a helpful benchmark to measure your progress throughout your financial journey.
Take an honest look at debt
Before the pandemic, Americans were saving more than ever. Post-pandemic, the picture is much grimmer. Savings have dwindled, and consumer debt has skyrocketed. To make matters worse, interest rates keep getting raised by the Fed to combat inflation, meaning that any debt you carry costs you more now than it was back in 2020 or 2021.
It’s hard not to get emotional about your decisions because of COVID. You might still be making loan payments for a personal loan you took out when you first lost your job and were struggling to make it through to the unemployment office on the phone. Or that balance transfer card you swore you’d pay off by the end of the promotional period could be coming back to haunt you.
Even though it can be emotional to think about your debt, it’s important to get honest about it if you’re going to achieve your long-term goals.
Find out your credit score
Another important indicator of your financial health is your credit score. Knowing your credit score and working to improve that number can help you qualify for better financial products and interest rates, which, in turn, can save you money over the course of your life.
You can find out your credit score in many places, including websites like Credit Karma and annualcreditreport.com. Generally, a score of 670 to 739 is considered “Good,” while a score of 630-689 is considered “Fair,” and a score of 720 or more is considered “Excellent.” Monitoring your credit (and improving your credit) can be a great way to get a fuller picture of your personal finances.
Two of the easiest ways to improve your credit are to lower your credit utilization by paying more than the minimum each month and paying your bills on time. By reducing your debt, you can improve your score over time — and reap the benefits of a better credit score. Especially when inflation still impacts many consumer goods, the ability to qualify for some of the best cash back credit cards can be a major boon.
How to manage your money better post-COVID
Once you have a full picture of your monthly spending and income, you can determine what habits need to stay and what can be scrapped or improved. Here are a few tips to keep in mind as you work to manage your money better after the coronavirus pandemic.
Create (or review) your budget
If you don’t have a budget, it’s important to get on one ASAP. A budget is a written plan that helps define your monthly priorities. It clearly outlines where your income needs to go each month and what you want it to do. This may include paying your rent or mortgage, paying any utilities, contributing to savings accounts, paying for subscriptions, and buying groceries.
There are a variety of budgeting apps on the market (some of which are free and others that cost money). Some people also like to create their own spreadsheets or use paper and pen. Many fans of Dave Ramsey’s approach to personal finances even use the envelope method. When it comes to budgeting, the most critical thing is to develop a system that works for you.
If you already have a budget (and many people who were flying by the seat of their pants started to budget during the pandemic), it’s a good idea to revisit it. Perhaps you’ve drained your emergency fund and must build it back up more aggressively. Or, maybe you found yourself subscribing to multiple meal delivery kits or services like DashPass and Uber Eats that you don’t use as much now that you can eat at a restaurant yourself.
Again, the important thing to do when analyzing your budget is to ensure that your spending aligns with your financial goals. If you want to help send your kids to college and only contribute $50 a month to their 529 accounts, it might make sense to see where you can reduce spending to increase your contributions.
Especially if you’re trying to pay off high-interest debt or loans, your budget will be your map and lifeline for the next year or two. It will be why you can say no to grabbing sushi or taking that expensive bachelorette trip to Vegas if you don’t have money budgeted for eating out again or another vacation. It takes willpower to make these decisions, but once you’re out of debt, you will have much more flexibility with your finances to make these sorts of spur-of-the-moment spending decisions.
Related: The 50/30/20 Budgeting Method and How It Works
Use AmONE to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- With personal loan interest rates rising, now could be a great time to find a personal loan. Through our partner AmONE, you could get matched to a lender who could offer as much as a $50k loan with rates as low as 5.99% APR.
- Approval and loan terms vary based on applicant qualifications. Not all applicants will qualify for the full amount or lowest available rates. It takes minutes to see your results. And don't worry- filling out the form won't hurt your credit score and is free, so why not give it a try?
Save for emergencies
Many people who lived through COVID-19 viscerally felt why it’s important to save for emergencies. Even those with emergency funds may have realized that their fund wasn’t big enough to weather the storm of a job loss for such an extended period.
Post-pandemic, you may want to reflect on how big of an emergency fund you really need to feel comfortable. Some people say that it’s important to have at least a month of expenses saved up, while others push that number to three or six months. Particularly cautious individuals choose to save up a year of expenses, which takes time but provides immense peace of mind.
Another tip to remember when saving for emergencies is to think of your emergency fund as separate from other predictable emergencies. For example, your car is going to need new tires and your water heater is going to break down at some point or another. Saving for these types of events separately from your emergency fund can help you ensure that your emergency fund is only used for major emergencies and doesn’t get depleted due to an appliance repair. You may even choose to have a separate fund for home repairs than you do for emergencies since there are always things that will break down.
Pay off debt
We’ve already talked about debt elsewhere in this piece, but it can’t be overstated just how important it is to pay down your debt as soon as possible. This, of course, takes sacrifices, and especially post-pandemic, it can be psychologically difficult to choose not to go out with friends who you have missed seeing for close to three years.
Even though it’s difficult, you can do so much more with your money when minimum monthly payments and recurring interest charges aren’t squeezing your finances.
Interest rates, as of writing, average about 24.10%, which is a truly ugly hit to take each month. As such, whatever you can do to reduce your debt as quickly as possible is thus worth its weight in gold. If you could invest $100 with a guaranteed return of 24.10%, you would immediately jump at the opportunity. Consider paying off debt as having that same kind of guarantee, and you may be able to tackle it more aggressively.
Related: How to Pay Off Loans Early and Get Out of Debt Faster
Make an investment plan
Once you’re debt-free and on a conscious spending plan via your budget, you can really start to dig into financial planning. It’s important to save for retirement, which may include going beyond your contributions to your company-sponsored 401k. If you have children, grandchildren, or nieces and nephews, you may also invest in accounts to help them with educational costs later in life.
As you define your financial goals, think about what your investment plan may look like, too. You can do this on your own, with the help of robo-advisors at the major online brokerages, or by hiring a financial planner to give you their perspective. Many people stopped investing during the pandemic and missed out on some particularly large gains that could really have changed their financial future.
Related: Tips for Managing Money as Newlyweds
The bottom line
Americans made all kinds of sacrifices during the pandemic. Some of those habits were for the best, while others may have dug them deeper into a financial hole they’d rather not be in. 2023 may not mark the end of the pandemic, but it does mark a transition to a bit more of a stable world when it comes to the virus.
Unfortunately, the world of personal finance is still just as impacted by COVID-19. Interest rates remain high, although signs indicate a gradual decrease in interest rates. On the other hand, with the drama surrounding certain Silicon Valley banks, the student loan payment pause set to expire soon, and the Supreme Court weighing in on whether or not Biden’s $10,000 forgiveness plan is constitutional, things are still quite in flux.
In the face of such continuing uncertainty and fluctuation, a solid financial plan is your only defense as a consumer. By taking a good, hard look at your finances, determining your net worth, and getting on a written budget, you can take the necessary steps to control your finances. That may include increasing your emergency fund, decreasing your debts, or investing more aggressively. All of these are worthwhile goals.
Ultimately, many people have learned first-hand the importance of managing their money effectively due to the events of the coronavirus pandemic. If you’ve been living with your head in the sand, ignoring some of the bad decisions you were forced to make during the height of lockdown, now’s a great time to come up for air and create a game plan. There’s no time like the present — and you may have a clearer picture of your needs and financial goals.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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