It’s been over a year since the coronavirus emerged and changed how we do just about everything in our lives, including how we save and spend our money.
With thousands of people out of work and businesses suffering across the country, the financial crisis became so severe that it forced everyone to rethink how they save money. For some, the effects and length of the pandemic have caused long term financial problems that are hard to get out under from. This is particularly an issue for hourly workers or those in the hospitality and foodservice industries that were affected most by the pandemic.
Now that vaccines are being distributed on a larger scale and new cases are decreasing, it’s a good time to consider your future past COVID-19. Use these ideas to help you start creating your own financial plan:
Don’t quit your day job
With stimulus payments and tax returns coming around the same time (depending on when/if you filed your taxes), it may be tempting to use that additional money to take time off work or quit completely. While you should feel encouraged to use your days off to rest and relax, abandoning your job completely is probably not the right thing to do, especially with the continued presence of the pandemic.
This might actually be a good time to consider new ways to bring in income to help preserve or grow your savings. Many companies exist that offer freelance or other gig employment opportunities within a variety of industries such as ride sharing, marketing, and hospitality. These resources are easily identified by searching online and allow you to secure project or shift assignments around your schedule. For example, as a hospitality staffing company, LGC offers diverse shift assignments through the app LGC Now.
Use ‘bonus’ income wisely
Some people will need to use their stimulus payments and tax refunds immediately to put towards bills or other household necessities, and that’s perfectly okay. But if you don’t have any urgent reason to spend it, the wisest thing to do would be to save it or find a way to invest in your future or the future of communities that are important to you. Here are some tips and ideas for how to spend (or save) your stimulus money:
- If you are employed and have the financial resources, use it to pay off credit card or student loan debt. According to Forbes, now is a great time to pay off student loan debt because a lower balance means your interest rate (that starts accruing again in September 2021) will be calculated off a smaller number. Forbes does mention that if you have high-interest credit card debt, that should be addressed before student loan debt because it has a higher interest expense.
- Another option is to put your stimulus payment towards a retirement plan. You have until May 17, 2021, to invest in a traditional or Roth IRA for 2020. Investing in a retirement plan is a great way to protect your future and allow your money to grow. (Check out these retirement planning tips from NerdWallet.)
- Having an emergency fund is a smart way to help ensure that you’ll have financial support in the future in case of an unforeseen event. If you don’t have one already, use the stimulus check to get it started and then add to it when you can.
- If none of the above situations apply to you and you have the financial resources, consider using the money to support a community that needs it. Small businesses and in particular, the hospitality industry, are still recovering from being closed or restricted throughout 2020. By donating some of your money to businesses/communities in need, you can help bring us one step closer to the normalcy we’re all looking for.
Review your expenses
If you’re invested in improving your financial future, look at how you’re spending your money today and what areas you can improve. For example, creating a monthly budget can help you manage your expenses and cut back on unnecessary purchases.
Even essential expenses like bills can be reviewed for money-saving measures. By negotiating your bills, like car insurance or internet for example, you can get a lower price and use that money where it’s needed.
- Additional bursts of income via tax refunds and stimulus payments don’t mean you should quit your job.
- Consider finding a way to bring in extra income.
- Put your tax refund and stimulus checks towards something useful either for yourself or the economy.
- Implement a budget or work on negotiating your bills.
The coronavirus has shown us that most people (and companies) aren’t as financially secure as they may think. By taking these steps to recover from the economic impact of the pandemic, you can address any financial issues you have and better plan for the future.