Regulations and restrictions are being lifted across the country as we begin to slowly return to a post-pandemic state of normalcy. Travel – both domestic and international – is resuming, employees are returning to the office, kids are resuming in-class learning, and opportunities for all sorts of spending are once again highly accessible.
All of these aspects have a significant impact on our finances. While the pandemic may have affected expenses and income streams, there are still ways to readjust and enjoy the slow return to the new normal. As you consider your financial situation, here are some tips to commit to your financial short-term and long-term goals while reacclimating to everyday life:
Review Your Cash Flow, Spending, and Budget Accordingly
The pandemic catalyzed over a year of uncertainty in many cases, but especially financially. As we return to some level of everyday life, it is essential to review your finances and adjust your spending. During the pandemic, you may have reduced your spending on discretionary activities, like eating out, purchasing gas, and increased spending on necessities, like utilities.
Consider how inflation may have impacted the cost of your everyday expenses and that your budget before the pandemic struck may no longer be applicable. Reviewing your income and reallocating your categories of spending will allow you to keep stock of your finances while enjoying the return to normal life. Prioritizing fixed expenses, investments, and savings while leaving room for discretionary spending will allow you to continue to feed your financial goals.
Surviving a global pandemic calls for a reward, so it is okay to incorporate leisure into your spending categories if you do it strategically. Work with your financial planner to create a budget that meets all your needs.
Continue to Prioritize Saving
While it may be tempting to spend more and save less with the world reopening and opportunities for leisure becoming widely available again, it is important to continue the saving priorities you made during the pandemic or rebuild the progress you may have lost. If you have not begun saving, work with your financial advisor to forecast your finances and start allocating a consistent amount to savings.
This includes paying down debt, reducing interest, and investing. Work closely with your financial planner as you evaluate your debt and create a plan to pay it down to reduce your interest, and create a portfolio that suits your budget to grow your wealth.
Continue Emergency Planning
Although we see the light at the end of the tunnel, it is crucial to stay prepared and not forget the lessons that 2020 posed. Planning ahead and adding to your emergency savings will allow you to remain cushioned for the next possible crisis – whether global or personal. In this, you will be ensuring your financial security while simultaneously contributing to the future of your wealth.
Your emergency fund should cover your financial expenses for six months. This amount is different for each family and individual. By stocking your emergency fund, you will avoid going into or furthering debt or dipping into other savings in the case of a crisis.
Recommitting to the Future
As we recover from over a year of utmost uncertainty, we can finally look ahead and resume (or begin) planning for the future. Whether that involves renewing or increasing contributions to retirement savings (or starting now), estate planning, college savings for children, or cutting down debt, work with your trusted advisor to develop a plan that allows you to comfortably enjoy today while planning for tomorrow.
At IMAFS, we are a team of fee-only financial planners that specialize in helping you achieve financial security and freedom. With medical wealth management services and being members of the Idaho Association of Tax Consultants, our team has the knowledge and resources to help you build for success. We will work with you to create a plan that aligns with your current financial needs while committing to your long-term wealth. Contact us today for more information.