The onset of the COVID-19 pandemic was sudden, immediate, and scary. No one knew what life would look like in one month, not to mention one year. The pandemic has had a significant impact on people’s personal and financial well-being. Emergency lockdowns and restrictions have strained many people’s finances. Now, with society beginning to emerge from the pandemic and individuals starting to recover from the financial strain it has caused, it is important to be increasingly aware of personal finance.
The pandemic has shown us that nothing is certain. Things can and do change with no warning. As we continue to recover from the pandemic, individuals have learned the important role that personal financial well-being plays and how beneficial it can be to improve their personal finance.
Outlined below are several tips for managing and improving personal finance in 2021.
Lockdowns have led many to spend more than they would normally. Limit take-out and delivery orders, and instead cook at home. Limit Amazon purchases for things that you don’t really need.
Some expenses will be more important than others. Many people had their income reduced during the pandemic and/or lost their jobs during the lockdowns. This led some to qualify for payment breaks and/or extensions. As things improve, it is important that individuals prioritize the bills that should be taken care of first while not forgetting those that can wait.
Be Aware of Repayment Due Dates
As mentioned earlier, many lenders gave their clients payment breaks in the wake of the pandemic. These measures are temporary, so it is important that people are aware of when those repayments will resume, how the loan will be impacted long-term, and how their monthly budget will be affected. Planning, and possibly saving for those repayments, will be helpful when they start again.
Saving money each month is always a good idea. You never know when you may need to replace the engine in your car or buy a new fridge. Both can be relatively expensive and having the funds you need to care of these types of expenses is useful.
Follow the 50/30/20 rule. Following this budgeting plan helps individuals to decrease their spending and increase their savings. The 50/30/20 rule divides your income by percent and delegates what each percent will be contributed towards. 50% of your income goes to living essentials or needs, 30% on discretionary expenses or wants, and 20% towards savings and investment.
Take care of your debt. Pay off credit card balances as much and as often as possible and limit how much debt you are taking on. A lot of debt will not only damage your credit score and hinder you from taking out other loans, but it will also make saving very difficult.
Improving your financial well-being will help you be prepared for whatever may come next. It is important to learn from the pandemic and its impact on personal finance.