Months after it erupted onto the scene, the COVID-19 pandemic continues to impact our lives and economy. At this point, the idea of "back to normal" seems like a pipe dream; still, we make strides toward a "new normal."
From a financial perspective, it would be an understatement to say that things have been tough. But it hasn't been all bad. The other night, as my family was congregated in the kitchen, chatting and preparing dinner -- a significantly larger part of our routine than during pre-pandemic times -- it hit me that some of the coping mechanisms we've adopted might serve us well going forward.
You probably have your own list, but here are several habits I've identified that may have some serious staying power:
- Meticulously scrutinizing expenses. With all the uncertainty, "budget" has transformed quickly from a noun to a verb in households across the country. Holding off on unnecessary purchases and reexamining everyday spending has become the rule, not the exception. The Bureau of Economic Analysis reports our personal savings rate on a monthly basis, and, as I write, the latest number is 13.4% -- as high as it has been since 1954.
- Faithfully funding cash accounts. Regularly contributing to a cash account or emergency fund requires disciplined hard work. But in times of crisis, having cash on hand offers much-needed flexibility and peace of mind. Clearly, this is a habit worth keeping or adopting.
- Being deliberate. A lot of folks I've spoken with over the last few months are taking a much more thoughtful approach to their finances. These conversations have ranged from individuals carefully weighing the timing of military separation to couples totally re-assessing their priorities and goals. Too often, the fast-paced nature of our lives makes it difficult for us to be intentional about our plans and priorities. But if we can carve out time to discuss our goals and reevaluate our progress, we'll feel secure in the knowledge that we're on the right track.
- Creating a solid plan. Speaking of plans -- and I must admit this is more aspirational than a pandemic-created habit -- have you questioned, created or updated yours during the pandemic? With time on our hands, changing circumstances and a lot more togetherness, many people could have cordoned off the time to assess their finances from top to bottom: goals, assets, liabilities, income, expenses, insurance, retirement and estate planning. These are all intertwined and should be tied together by a comprehensive plan. The goals element is especially relevant, as the crisis has allowed us a clearer vision of what's truly important.
- Transitioning from overwhelmed to empowered. At some point during this process, and I can't pinpoint the exact moment, I started to practice what I've preached to my children as they've grown up: Exert the vast majority of your energy and efforts on what you can truly control, and let the rest be what it will be. Although it may seem different at times like these, there is a lot that you can control, and that's where you should put your financial focus.
- Building a consistent routine. I've been blessed to be able to work from home throughout the pandemic. If that's your situation, you probably have a solid routine -- the only way you can even pretend to wear the hats of parent, employee, teacher, etc. Translating that "routine approach" to your finances by consistently saving, monitoring and conducting periodic reviews can be a real positive. That's one reason why the "pay yourself first" mantra has been around so long -- it's a routine, and it works.
- Staying positive. More than a habit, keeping a positive outlook pays dividends for you and those around you. Though we never know what the future holds, if we can stay positive in the present, we're likely to experience physical and emotional health benefits -- two good things to carry into our new normal.
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