It’s been about a year and a half since the pandemic recession began, and families all over the United States are still feeling the financial impact of Covid-19. It’s safe to say that the worldwide pandemic has turned us all on our heads, as there’s only so much preparation one can do for more than a year of unprecedented events.
But even though the Covid-19 pandemic may seem unpredictable, your financial health doesn’t have to be. Here are some helpful ways to manage your personal finances in the months to come.
Continue Reducing “Normal” Expenses
Chances are that during quarantine, you were able to get by without your “normal” expenses, such as car repairs, beauty and spa services, tailoring, eating out, a gym membership, and buying new clothes. Since you’ve proven to yourself that you are able to live without these extras, think long and hard before incorporating them back into your budget. Instead, use the money that you would spend on these items to pad your savings account.
Maintain an Emergency Fund
Even if you didn’t lose your job, the pandemic has really driven home the importance of creating a robust emergency fund, It’s a good practice to have enough cash in your savings account to cover about six months of living expenses, so make it a habit to squirrel away a percentage of each paycheck. You’ll never know when you’ll need it.
Increase Your Retirement Savings
If you have been consistently contributing to a retirement savings account during the pandemic, you’ll want to keep up this momentum after things get back to normal. Increasing your contributions to your retirement will only set you up for success in the future.
Open a High-Yield Savings Account
Not all savings accounts are created equally, and if you are not utilizing a high-yield savings account you could be missing out on a fantastic financial opportunity. You’ll be able to benefit from a higher return rate than traditional checking and savings accounts, so why not take advantage?
Revising the Terms of Your Debt
It’s okay if you haven’t been able to save as much as you planned during Covid-19, and we’re here to tell you that you may be able to renegotiate the terms of your debt to make saving easier for you. Many credit card and loan companies are working with customers during this time, so it’s worthwhile to have a conversation with them about paying back your debt. Ask about changing your payment due date, requesting a payment plan, refinancing a loan, and getting a payment extension. It doesn’t hurt to ask!
Plan for 2021 Taxes
There have been a lot of factors in 2020 that will affect your 2021 tax return, including economic stimulus payments, unemployment benefits, and payroll tax deferral. All of these extras can make your tax return look very different than in years before, and you don’t want to get to tax season to be shocked and unprepared. It’s never too early to start your tax planning, so you know exactly what to expect.
At Second Opinion Partners, we offer holistic planning services to provide the education, resources, guidance, and advice that you need to make informed financial life decisions. Our team is here to help you make these choices with clarity and confidence, and we will set you up for financial success. Learn more by contacting us today.