The pandemic nearing a year, meaning economic instability for many is nearing a year. More people than ever have taken financial action. According to a survey by The Harris Poll among over 3,000 U.S. adults, close to 4 in 5 Americans (78%) reported that the pandemic caused them to take financial action. In the survey, 40% of people reported that they pay closer attention to finances, 34% of people said that they prioritized saving money more than they did before, 33% of people said they tried for the first time/increased usage of a digital bank service, and 32% of people said that they conducted more bank activities online. Additionally, 31% of people said that they started saving/saved more for emergencies, 22% of people said that they tried to understand more about their finances, 19% of people said that they downloaded a new financial app, 17% of people said that they researched different financial solutions, and 15% of people said that they educated themselves on savings rates that banks offer. With all of this being said, here are some of the top money habits you should continue to carry forward even after the end of the pandemic:
1. Do more banking online
As seen above, 33% more people used digital banking for the first time or increased their use of digital banking and 32% of Americans said that they conducted more of their bank activities online. Online banking allows people to reduce exposure to COVID-19 and saves time and energy since one doesn’t have to go to a physical location. Even if your bank is not “online-only,” many other banks have websites and apps that allow customers to do almost all of their banking from their phone or computer. Even if you are scared about doing online banking because of security reasons, there are multiple ways to do it safely. Make sure you are a safe Wi-Fi network and use a two-factor authentication on top of checking that the online banking service is able to monitor your account for fraudulent activity. If you are new to the online banking world, make sure to look for one with low or no fees and high interest rates. You might not find something “great” as interest rates are still at a historic low, but as the economy recovers, they will most likely go back up.
2. Get out of debt and stay out of debt
More people than you would expect have thousands of dollars in credit card debt. Before doing anything else, make sure to pay this debt off. Interest will keep accuring and you will owe more and more as the months go on.
3. Don’t buy things just because they are on sale
Buying stuff on sale doesn’t save you money, unless it’s a real necessity. It just means that you are buying something at a slightly lower place. If you are using coupons and buying things on sale that you normally buy or you have to buy because you have to live, there is no problem with that. However, if you are buying things on sale just because they are on sale, you are spending money frivolously which is not a good money habit.
4. Live under your means
Make sure to live on less than what you make. This seems like a pretty basic concept, but most people don’t adhere to this because they are impatient and envious. Yes, it is hard not to want and purchase nice cars, a big home, and expensive clothes, but being up to your ears in monthly payments and owing money to credit card companies is much worse. Buying a bigger house than necessary and then drowning in mortgage debt is not worth it. Additionally, if there is an emergency now or in the future, how are you going to deal with that if you have no savings? Your mental state and relationships will thank you for living under your means.
5. Look to put your money in a better savings account
A bank account that earns you .01% interest annually is doing nothing for you, especially because the U.S. inflation rate has been around 2% for the last few years. This means that money sitting in a bank account with interest less than 2% is losing value. You need to make sure that your savings account is at least earning you the rate of inflation.
6. Save/invest for retirement
Put your money to work now so that you don’t have to later in life. Make sure to invest in your employer-offered retirement plan if they have it. This is one of the easiest ways to invest for retirement because money is automatically pulled out of your paycheck. Thus, you aren’t tempted to put the money somewhere else. You should definitely enroll in this plan if your company offers to match a certain amount of the money that you put into the plan. Secondly, you should invest in a Roth IRA. Even if your company doesn’t offer one, you should invest in one because your money will grow tax-free. You won’t owe money to the government when you reach retirement and need to take money out of the account.
7. Pay more attention to your finances
Around 40% of Americans said that they pay more attention to their finances because of the pandemic. One should continue this habit into the future by tracking everything you spend for 1-3 months. You can better map out a reasonable budget this way and align your spending and money habits with your income and your goals. One way to break down how much you should be allocated for different things is the 50/30/20 budget. This means that 50% of your income goes towards needs, 30% goes towards wants, and 20% goes towards savings and debt repayment. You can alter this to suit your personal lifestyle, however.
8. Build an emergency fund
Emergencies happen when you least expect them to. The last thing you want to worry about is how to pay for it in the moment. You should have an emergency fund that is large enough to pay for at least three months (preferably six months) of expenses. We are not living in a fantasy world, and sometimes life is tough. There are very real things like losing one’s job, medical expenses, and family emergencies.
9. Know when to say ‘no’
You know yourself best. One of the best money habits you can adapt and carry forward is learning how to say ‘no’ to yourself. This is not an easy thing to do, however. There are some simple things to remember when having an inner argument. If what you are deciding on involves more debt, you should say no every single time. If you are trying to decide whether or not to purchase something online, put it in your cart and wait a week to buy it. You will either find something better or lose interest entirely most of the time. Lastly, if you want to buy something in the store, put the item(s) on hold for 24 hours and leave. If you take the time to think about the purchase for a full day, you are much more likely to say no. In addition, driving all the way back to the store is a lot more inconvenient than saying no.
10. Plan out your meals
Spending money at restaurants or on take-out is one of the easiest ways to spend more money than you plan. One of the best ways to save money on a month to month basis is planning and cooking your meals instead. Cooking meals also means leftovers for lunch or dinner the next day.
11. Set financial goals
If you don’t set financial goals, how do you track your progress and what are you working toward day in and day out? Setting goals is one of the most important things you can do for yourself. Make sure to set specific short-term and long-term goals for months, years, and much later in life. If you want to grow and be in a desirable position financially, setting financial goals is a must-do.
12. Look for additional ways to make money
More and more people these days are taking up a side-hustle in addition to their regular job. This could mean starting your own business or getting a second job. Making a little extra money will go a very long way. See our article about the best side hustles here.
13. Budget, budget, budget
A detailed and thorough budget is essential for healthy finances because it controls what you spend and how you prioritize your money to different sectors of your life. See our article on budgeting here.
There is always room for improvement regarding one’s financial decisions. However, the good thing is, you aren’t stuck and you can make changes. By adopting some of these money habits mentioned above, you can slowly turn your financial health and overall lifestyle around.