If you’re feeling like it’s hard to see the light at the end of the coronavirus tunnel, and that the whole world is on hold, you’re not alone. “Normal life” is at a standstill, and this pause, affecting all facets of our lives, including our savings goals.
How are we supposed to save for a vacation or a down payment on a home when the outside world seems amorphous, not real, or too far away to even worry about? Plus, with so many of us struggling financially due to millions of layoffs and furloughs over the past two months, putting extra money aside might feel impossible.
“Whenever we’re under threat, our time orientation becomes so present that it is hard to think about the future, because we’re busy scanning our present for danger,” explains Financial Therapist and Financial Wellness Advocate for Prudential Amanda Clayman. “Being able to acknowledge and calm down that present-day self who thinks they need money right now is crucial when it comes to saving.”
Despite all of this, we still need to put away whatever money we can for a “rainy day” — or at least a rainier day than this one. But without the certainty of the future, or even the inspiration of a vacation to keep us motivated, how do we do it?
Assess and Review
Sophia Bera, CFP, and Founder of Gen Y Planning, recommends flipping the script: “It’s a perfect time to start saving and to get motivated,” she says. No matter your financial situation, this pandemic has taught us all the importance of a solid nest egg.
If you’ve been laid off, you may be relying on what you had put away. And if you’ve experienced a pay cut, now is the time to tighten up your budget and only spend on what is necessary, so you can continue to save anything that you can. And if you’re fortunate enough to have job and income security, you’re likely saving without even realizing. (You may not be having lunch out during your work day, you may not be spending on gas, etc.) All you need to do is transfer the money you’re saving from checking into your savings account, and let the interest rate do the rest.
Once you’ve figured out where you stand, review your situation in more detail to ensure anything going out is truly necessary, says Clayman. If there’s anything you can adjust that would have direct bearing on what you’re able save, do it.
Feed Your Savings Goals
Don’t let your bigger overall savings goals — like investing for retirement or paying off credit card debt — fall by the wayside if you can afford to fund them, Bera says. In fact, she notes that there are a lot of people who have been aggressively saving right now due to a decrease in their spending, and a “turbo charged” desire to fulfill financial goals.
Think about it this way: You’re not planning vacations, and you’re not going to parties. The elimination of those things alone can save you hundreds, possibly thousands of dollars.
Instead of spending it on another pair of trendy sweatpants you saw in an Instagram ad, why not pay off debt? Better yet, if you’ve been putting off starting that emergency fund, now’s the perfect time. Take all that isn’t spent and sock it away into a new account. You’ll be shocked at how quickly it adds up, Bera says.
And even if you can’t keep pace with what you had been saving before, anything counts, says Jennifer Lane, certified financial planner and founder of Compass Planning Associates in Boston.
Support Your Other Goals
Maybe you’ve been trying to take the family to Disney World for years, but unexpected expenses keep getting in the way of your planning. Start that Disney World fund now, and use all of the money you would have spent on dining out or going to bars with friends to fund this goal.
“It’s a good time to put this practice into place,” Bera says. You’ll be so glad you’ll be able to pay for those plane tickets in cash rather than falling into a pit of debt just to get your family on Mr. Toad’s Wild Ride.
Your savings goal doesn’t have to be such a big deal, either. Bera recommends taking note of how much debt you went into when you were holiday shopping for Christmas 2019, and trying to save that amount — or more — so that you can shop with confidence comes wintertime. You’ll be motivated by the fact that you won’t be making debt payments come 2021, and, of course, by the excitement of the holidays.
Embrace the Pandemic
The distinct lack of FOMO in the air may be helping you work toward your savings goals more than you even realize. Why? No longer are you hopping on a plane to Coachella just because the rest of your squad is doing it.
No one cares what anyone is doing right now, wearing, or looking like, so embrace the lazy look and the cheap lifestyle that comes with it. Then, consider taking that lifestyle with you into the future, even when we do return to normal life. You might be loving the no makeup look (and what it’s doing for your skin) or you could be a newfound hair colorist, doing all your own styling from the comfort of your oh-so glamorous garage.
Then, look to take your newfound cooking skills to the next level and have cooking nights in with friends rather than going out to an expensive restaurant. You can all take turns hosting and cooking, or you can go the potluck route. You’ll be amazed at the extra money in your pocket.
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