The Pandemic Has Inspired the Majority of Consumers to Change the Way They Spend and Save
Should you be adjusting your habits as well?
- A new survey reveals that the pandemic has inspired many people to rethink their financial habits.
- It could pay to take a closer look at your personal financial picture and see if changes are in order.
There may come a point when you decide to reassess your financial habits. For many Americans, that point in time was the pandemic. In fact, 59% of consumers are planning to make permanent changes to the way they spend and save in the wake of the COVID-19 crisis, according to a new survey by Lincoln Financial Group. If you're not sure whether you should follow their lead, ask yourself these questions.
1. Do I have an emergency fund?
The pandemic has taught us that our financial circumstances can change in an instant, and that we need protection in the form of savings. If you don't have an emergency fund with at least enough money to pay for three months of essential living expenses, then it may be time to change your habits to allow for a ramped-up savings effort. That could mean spending less on non-essential items or making bigger changes, like moving to a more affordable home, to free up cash.
2. Has my debt load increased or shrunk?
It's not uncommon to carry some sort of debt, whether it's a credit card balance or personal loan. And if your debt pile shrinks by the month, then you may not need to make many (or any) changes to your spending habits. But if the opposite happens – you keep adding to your debt – then it may be time to get on a stricter budget and cut back on leisure spending until that debt is whittled down. Or, you may need to consider getting a second job to drum up cash to chip away at your debt.
3. Do I have any money left over at the end of the month?
Generally speaking, it's a good idea not to spend your entire paycheck month after month. Even if you don't have unhealthy debt and are set with emergency savings, you should, ideally, be socking away some money every month for retirement. If you're unable to do so, it may be time to rethink some of your expenses.
4. Do I have a clear sense of what my various bills cost me?
It's good to have a sense of what you spend across various expense categories, from groceries to medical bills to entertainment. If you consider yourself clueless in that regard, then you really need to get yourself on a budget. That way, you'll have an easier time tracking your spending and making choices that allow you to meet different financial goals, whether it's saving more or paying down debt. You can set up a budget on paper, on a spreadsheet, or via one of the best budgeting apps.
For many people, the pandemic served as a financial reality check. And while a lot of people learned the hard way that they needed to get a better handle on money matters, the silver lining is that many have been inspired to make positive changes that better their financial picture.
It pays to run through these questions and see if a shift in your saving and spending habits is in order. It could end up improving your outlook and buying you some much-needed peace of mind.
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