19% of Households Lost All of Their Savings During the Pandemic: How to Rebuild
If your savings are depleted, here are your next steps.
It's no secret that the COVID-19 pandemic dealt a serious financial blow to households all over the country. Millions of Americans lost their jobs over the course of the past 19 months, and even those who remained employed often struggled with income loss. While the three stimulus rounds that hit Americans' bank accounts may have helped soften the blow for some families, others are still in the process of trying to recover.
Not surprisingly, a recent NPR report reveals that 19% of U.S. households lost not just some, but all of their savings in the course of the pandemic. That's a hard financial hit to recover from. If you're looking at having to rebuild your savings, here are some tactics worth employing.
1. Consolidate your debt
In addition to spending down their savings, many people had to rack up debt to stay afloat during the pandemic. If you're now sitting on a bunch of credit card balances and loans, getting a handle on that debt could be your ticket to building your savings back up. The less money you throw away on interest, the more you'll have to put into the bank.
There are several options for consolidating your debt and making it less expensive to pay off. If your credit score didn't get hit too badly during the pandemic, you may qualify for a balance transfer offer -- ideally, one that allows you to move your existing credit card balances onto a new card with a 0% introductory APR.
Another option is to consider taking out a personal loan, which allows you to borrow money for any reason. The stronger your credit score, the lower the interest rate you're likely to snag on one of these loans, but there are loans available for borrowers whose credit is poor.
2. Use a tight budget
Chances are, you're already leading an extremely frugal lifestyle as you attempt to move past the pandemic. But there may still be small ways for you to increase your savings, and a good way to know is to set up a budget. Once you do, you may be able to identify spending categories you can spend less in, even if it's $5 here or $10 there.
If you're not familiar with budgeting, there are different budgeting apps you can use to get the ball rolling. It pays to try some out and see which you find easiest.
3. Pick up a side job
You may need your entire paycheck to cover your essential living costs, leaving you with no room to put money back into your savings. If that's the case, a side job could be your ticket to padding your bank account balance.
The gig economy is still loaded with opportunities to earn money at your own pace and on your own schedule. You could sign up to drive for a ride-hailing service a few nights a week, or house-sit for extra cash on the weekends.
Don't give up hope trying to rebuild your savings
Losing your savings can be devastating, and if you're in that boat now, you're unfortunately in good company. But don't despair. Just as you were able to build savings in the first place, it’s also possible to get back to where you were over time.
The pandemic was something no one could've predicted. The fact that you had savings to tap during it is something to be proud of. With any luck, these tips will help you get started on the road to rebuilding.
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