Now that many places are lifting Covid-19 restrictions, it can feel exciting to go out and spend money again. After all, it’s probably been a while since you’ve visited your favorite restaurant or took a trip to your regular weekend spot.
And by all accounts, consumers are raring to go. Many families are flush with cash from two rounds of stimulus checks, and expanded unemployment benefits. People who kept their jobs during the shutdown have also saved at record rates. And spending is surging in areas like travel, hotel stays, and meals out.
However, this newfound freedom doesn’t mean that it’s a good idea to splurge everywhere you go. In fact, as you’re gearing up for post-pandemic life, keep these five tips in mind to ensure your finances stay on solid ground.
Make a plan for student loans
Most federal student loan payments have been suspended since the height of the Covid-19 pandemic. Hopefully that suspension gave you some much needed breathing room during that time. Now that payments are set to resume in September 2021, it’s crucial to factor the extra expense into your budget.
One of the first steps should be to start tracking your income and expenses, particularly what you’re spending based on necessary and extras, says Leisa Peterson, a certified financial planner based in Sedona, Arizona, and author of The Mindful Millionaire.
“You’re doing this to see what you’ve got to work with and if you’re going to need to cut back in some areas to allow for the new debt payments,” she says. “If you need to cut back, prioritize your discretionary and don’t spend on the ones lower on the list temporarily,” Peterson adds.
The U.S. Department of Education suggests creating a repayment plan that works with your budget. Its loan simulator can be a good place to start. Another option is to apply for an income-driven repayment plan to help make payments more affordable, according to your income and your family size.
Budget for fun
Just because you got weekly manicures, daily lattes, and took nightly spin classes in your pre-pandemic life, doesn’t mean you should go back to spending on these items again. That’s not to say there’s anything wrong with occasional splurges for fun. But it’s important to take a look at what you missed while you were cooped up for more than a year, and what you didn’t miss.
Peterson suggests getting into the habit of writing down all the ways you’ve been spending your money. (If you haven’t revisited your budget, now’s the time.) Then, ask yourself what you’re really getting out of the purchase to see whether it’s truly something you want, and whether you can do without it.
“When we take the time to really know what we are buying with our money, we make better choices in how we spend it and are less likely to spend on things that don’t matter as much,” she says.
Let’s say you want to finally go on that road trip you’ve been hoping to do for a few years. Initially, you wanted this to be an opportunity to visit some cool places. But now, driven by a post-pandemic desire to connect with people again, you might reevaluate your original plan. Instead of spending lots of money on your original road trip idea, a weekend away with friends to a local campsite might seem like a better—and cheaper— alternative. With a more streamlined travel plan in your sites, you can figure out costs and budgeting accordingly.
Stash can help you stay on top of your budgeting objectives. You can create Goals1 within your Stash account for various things you’re saving up for, such as a “summer vacation” or a “new apartment.”
Budget for self-improvement and self-care
One common lesson people have probably learned from the pandemic is that taking care of themselves—including their mental health and career prospects—is paramount. Whether it’s taking 10 minutes during the day to meditate, or partaking in fun hobbies, consider continuing with these things. Some of these activities are quite affordable, and even free, and the benefits are well worth it. Just make sure you include these expenses in your budget.
As for self-improvement, consider putting a line item in your budget for meals out with potential mentors, networking events, or even conferences. You never know if the next person you meet will have a huge effect on the trajectory of your career.
Set automatic savings
Automating part of your finances can help you reach your goals much faster. For instance, if you don’t have an emergency fund now’s the time to set one up.
While many financial experts like Peterson suggest having at least three months worth of expenses set aside, you can start small. Even if it’s automatically saving $20 from each paycheck to a dedicated savings account (until you can afford to save more), it’s better than nothing.
With Stash, you can automatically invest small amounts of money into your brokerage account on your timeline.2 Set Schedule allows you to set up automatic investments.
Be mindful of “buy now, pay later” apps
Many retail websites contain buying alternatives like “buy this item for as low as $15 a month,” under the full prices of products, to encourage you to make purchases, and pay them off over time. It may be tempting to put more into your online shopping cart. But, some of these plans come with high interest rates. And if you’re late on your payments, your account may be charged extra fees, and even go into collections.
“The power you feel when you pay in full for your purchases is very different than when you buy things with debt,” Peterson says. “Budgeting for planned purchases will help you gain the strength to be more intentional about your money.” You might want to try making purchases with a debit card, such as your Stash Stock-Back® Card.
Reconsider buying a home
Since mortgage rates are still at all-time lows, it may feel like now’s the right time to buy a home. However, your finances need to be in order before thinking about becoming a homeowner. Considering how home prices have shot up and the low number of properties on sale since the height of the pandemic, it may not be a good idea to dive right into homeownership. Those bidding wars you hear about on the news? The sad reality is that they’re still happening.
And don’t anticipate interest rates to go up or home prices to go down anytime soon, says Jon Lallande, a loan offer with Cross Country Mortgage. Still, he is wary of borrowers who don’t have their financial ducks in a row, such as steady income, an ample amount of emergency savings, and low debt load.
“Even if you have a high income, lenders may not want to give you a loan if you don’t have some savings,” he says. “You want to be in a position where you’re not going to struggle with debt payments and your budget before adding on a mortgage on top of it.”
Lallande suggests looking at your income and debt when considering buying a home. If you have a lot of debt already, you may want to hold off. He does recommend reaching out to lenders to explain your financial situation — these professionals will walk you through whether it’s a good idea for you to make such a big commitment.
Follow the Stash Way
Stash urges people to follow the Stash Way®, which includes spending less than you earn, saving for emergencies, budgeting, investing, and insuring your assets and yourself.
Looking at your current financial situation, and how you plan on spending in the future, can be the key to a healthy relationship with your money. It doesn’t have to take a lot of time to do some planning, even if the post-pandemic urge to splurge has got you in its grip. And a little foresight can be well worth it.