Whether your bank account grew or shrank during the long months of lockdown, now is the time to take stock of your financial situation and decide your next steps.
The pandemic swept many people into uncharted financial territory. Millions lost their jobs and loved ones they relied on. Others endured more than a year of isolation and uncertainty, working from home or on the front lines. Whether your bank account bulged or dwindled during the long months of lockdown, now is the time to take stock of your financial situation and decide your next steps.
“We’ve been getting a lot of clients who say, ‘I really need to think about this now,’” said Pam Capalad, a certified financial planner based in Brooklyn and founder and chief executive of the financial advisory firm Brunch & Budget. “Either the pandemic was a wake-up call and it really turned their finances upside down, or people got through it OK and now they’re saying, ‘I need to figure out what is next for me.’”
In a survey from the Pew Research Center released in March, 30 percent said their situation had improved, while 21 percent said it had gotten worse. Forty-nine percent of adults said that their family’s financial situation was about the same as it was a year ago.
With limited spending opportunities, savings shot up during the pandemic. Last March, the personal savings rate was 27.6 percent, according to the Bureau of Economic Analysis. That rate, which represents personal saving as a percentage of disposable income, was 12.9 percent the previous March.
Depending on your financial situation and your priorities, what you do now will vary. But there are several ways to put yourself in a better position financially for whatever comes next. Here’s how to get started.
First, don’t rush it.
The trauma of the past year has been extraordinary, and for many people, their initial impulse may be to plunge in and make travel plans and purchases to make up for lost time.
“People feel like life was stolen from them, and an increase in spending often comes along with that,” said Brian O’Leary, a private wealth adviser and senior analyst at Aline Wealth in Melville, N.Y.
But if there was ever a time to re-evaluate priorities and align your spending and saving behaviors with your values, that time is now, experts say. Is your career on the right track? Do you like where you live? Are you happy in your relationships?
The pandemic may have helped people think about saving differently, focusing on what brings them joy, said Inga Timmerman, a certified financial planner and associate professor of finance at California State University, Northridge.