The COVID-19 pandemic has been unlike anything we’ve seen before. However, with reduced opportunities for discretionary spending, Equifax data shows that many people are cutting back on credit card debt and learning new financial habits. Regardless of whether your financial situation has changed since the year began, there are many simple steps you can take to save money today or in the future.
Cutting back on unnecessary costs is the first step you should take, although you may need to begin by redefining what’s “unnecessary.” Look at recurring bills and see if there’s anything that you don’t frequently use that you could eliminate. Also, look at the cost of your bare essentials, such as your mortgage, food, and utilities. Are you using food delivery services or ordering in regularly? This is a good opportunity to start cooking food entirely from scratch at home.
Additionally, while you may be in the habit of paying your credit card in full each month — a great habit to have — in hard times, it’s okay not to follow this rule. You may also want to see if your lender can offer relief from burdensome loan payments.
Adjust your savings goals based on your current financial situation. If you automatically transfer money into your savings account or retirement fund each month, you may want to modify the amount so that you have enough liquid cash to sustain yourself for three to six months. This way, you will be prepared for any other possible emergencies.
Withdraw from savings only when you have a plan for how much you really need and how you will be spending it. Keep in mind that you’ll need to save up again when this pandemic is behind us, so you’ll want to make doing so manageable. Evaluate the minimum amount that you need to keep in your savings account in order to feel okay about the withdrawal.