Survey Shows These 2 Positive Financial Habits Emerged From the Pandemic
Consumers made some positive changes in the wake of the crisis.
- In the wake of the pandemic, many consumers are trying to increase their savings.
- Others are reviewing their spending more often so as to not go overboard and land in debt.
The coronavirus pandemic had a devastating impact on a lot of people's finances. Many lost their jobs in 2020 when lockdowns were put into place, while a large number of Americans kept working but suffered income loss.
The silver lining is that many people learned some important financial lessons during the pandemic. Now, they're using those lessons to alter their behavior for the better. Here are a couple of positive habits that came as a result of the pandemic, according to a recent survey by CapitalOne.
Consumers are boosting their savings
In the wake of the pandemic, 42% of consumers report they're trying to pad their savings accounts. That's a good thing for several reasons.
First, having emergency savings is crucial not just during a pandemic, but in general. If you have an emergency fund, you may not need to resort to costly debt the moment an unplanned bill strikes. And you may also have a cushion in case you lose your job and your unemployment benefits don't kick in right away, or they don't suffice in covering most of your bills.
In fact, as a general rule, it's a good idea to sock away enough money for emergencies to pay for three to six months of essential living expenses. This means that if you normally spend $2,000 a month on non-negotiable bills, like rent and utilities, you should aim for at least $6,000 in savings. Many Americans didn't have a solid emergency fund before the COVID-19 crisis, so the fact they're working to change that is a good thing.
Another good reason to save more? Peace of mind. The knowledge that you have a financial cushion could help prevent rising bills from stressing you out.
Consumers are reviewing their spending more frequently
Having a good handle on your spending can help you meet your savings goals while also helping to keep you out of debt. Now, 40% of consumers report they're reviewing their expenses more frequently.
If you really want to stay on top of your spending, set up a budget. You can do so by combing through your bank and credit card statements from the past six months, seeing what your various bills cost you on average, and then comparing that total to your earnings.
Setting up a budget could prompt you to cut back on non-essential spending in order to meet your savings goals. It could also help you approach financial decisions with more confidence.
Say you want to refurnish your home, and you're looking at a monthly payment of $300 to buy the items you want on an installment plan. If, based on your budget, you have $300 worth of wiggle room to cover that bill, you can move forward with that purchase more easily.
Clearly, the pandemic dealt a devastating blow to countless Americans. At this point, it's important to take the lessons we learned from it and use them to avoid a repeat hit. And if you make a point to boost your savings once you're able to and keep track of your spending, you'll put yourself in a stronger position to weather the next financial crisis that comes along.
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