How to budget in a post-covid world – Forbes Advisor

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Life returns to normal. Our budgets are probably not ready.

More than a year after the pandemic began, increased vaccination rates are slowly peeling away the restrictions that froze society. California, one of the hardest hit states during the pandemic, recently lifted its remaining Covid-19 restrictions – marking a symbolic turning point in the fight against the virus.

But reopening means we will no longer be limited to just our homes or neighborhoods anymore. We are left with endless opportunities to push our credit and debit cards – and balancing a budget while adapting to our renewed lifestyles will certainly pose some challenges for all of us.

Consumers could have saved during the pandemic, but will it last? The personal savings rate, a percentage that illustrates how our disposable income is set aside for a nest egg or retirement, was consistently higher during the pandemic, hitting 33.7 in April 2020 and 27.7 in March 2021

But experts are now expecting a consumption boom.

Consumers did not exactly develop good habits during the pandemic. A June study by the American Institute of CPAs found that online shopping has made us blind users, and more than half of consumers (52%) buy what they want without thinking about it because it makes them feel comfortable. Perhaps more worryingly, the study also showed that 40% of consumers do not know their debit or credit balance until they get their monthly statement.

The pandemic taught us many lessons, including that we could all be a little more conscious with our money. Building a purposeful budget will better prepare us for the next crisis – and may prevent us from overspending now that our routines are semi-normal.

Here’s how to keep your finances under control when you return to normalcy

Consider these tips to keep your finances in check when you return to normalcy:

Tip # 1: Live a little

We have just survived the traumatic experience of a global pandemic. Many of us faced stressors that we did not even know existed, such as not being able to share a meal with our loved ones or be together for vacations.

Therefore, it is important to live a little first before going on full tilt with a budget. You just have to do it strategically.

Jackie Beck, an expert in debt reduction, advises people to create an entertainment budget with a total amount in dollars per. month or week that they would like to spend. However, the key is to let yourself be wasted with a slightly higher amount in your entertainment budget in the beginning.

“It’s your money and your life!” says Beck. “The key is to set limits both in terms of time and dollars for these dividends. Maybe you have a festive week or two with a fixed amount where you go out and do all the things you really missed.”

And while it may be fun to pamper yourself, that does not mean it will become your new lifestyle. At some point, the dividend should end – and then you should return to your regular expenses for entertainment activities.

“Just keep in mind that these are special things so you can enjoy them to the fullest – and so they don’t become ordinary,” Beck says.

Tip # 2: Review your budget again or create a new one

Reevaluating your budget – or building one from scratch – is one of the most important keys to financial success. It may not be the most exciting task, but it is one that will give you a clearer picture of where you stand financially and how much you can really spend without digging yourself into a hole of debt. A budget sets solid limits that allow you to live within your means – and paves the way for a solid financial future.

A solid budget will also give you a realistic idea of ​​how much you can spend on excursions. After calculating your fixed expenses, which include things like rent and consumption bills, income that is left over can then be allocated to “fun” expenses. Building that category into a budget will help you determine when you’ve had a little too much fun and need to spoil your spending.

“Since we’re all been together for over a year, it’s easy to convince yourself that it’s OK to go out to eat every night or say yes to every invitation you receive,” says Leslie Tayne, New York- based debt consolidation lawyer and debt expert. “Be sure to incorporate dinner and drinks into your budget to understand what you can comfortably afford and set aside for so many nights out.”

Read more: How to budget in 7 simple steps

To easily keep up with a budget, Tayne recommends that you set up spending alerts on your credit or debit card or through a third-party budget app like Mint.

Tip # 3: Drop the plastic and turn green

If you find it annoying to get a ping every time you swipe your card – or you keep blowing past your assigned category amounts each month – it may be a good way to get back on track to return to cash transactions.

The envelope budget method, where you store cash in physical envelopes based on budget categories, is a great way to physically imagine the budgets you have made. This way, you’ll instantly see when a category is running low, and when an envelope is empty, you can literally not spend too much – there are no more bills you can spend.

“Using cash, as opposed to a credit card, actually has a positive psychological effect,” says Lauren Anastasio, CFP and senior financial planner at SoFi. “Studies have shown that using cash actually reduces the amount of money someone would spend on an expense because of its more tangible nature.”

Those who do not like to carry cash can opt for alternative methods, such as an app or prepaid card. The Goodbudget budgeting app allows users to visualize their budget with digital envelopes, a la the envelope budgeting method; if you want to use a prepaid card instead, be sure to keep an eye out for any monthly maintenance or activation fees.

Read more: Goodbudget Budgeting App Review

Tip # 4: Get creative while staying indoors

Staying in is probably the last thing any of us want to do right now after months of being confined to our home.

Realistically, though, it’s not a smart way to manage money to see friends and family every night at a restaurant or bar. You know the saying: Too much of the good is, well, not good.

Instead, Tayne recommends being creative in staying in.

“Ask everyone to bring a dish (it does not have to be homemade – if they want to topple over with Korean BBQ wings, leave them!) And / or drink,” says Tayne. “Be creative and use what you have on hand. For example, if you have whiskey, ask someone to bring sour mix or bitter to make whiskey sour or old-fashioned whiskeys cheaply.”

Need help organizing? Try Potluck with Meal Train. The free website allows you to create an event, list what is needed, and invite attendees. It even sends a reminder to your guests 24 hours before the party.

Tip # 5: Spend time, not money

Overall, the pandemic has taught us the enormous value of being able to spend time with our loved ones personally. After separation for so long, even a brief meeting can satisfy our social needs – and prevent us from spending money we may not have.

“If the pandemic has taught us anything, it is that a walk in the park with a friend or loved one can be something to appreciate.” says Beck.

This tip may prove to be particularly important for those who may be struggling to regain their economic foothold after the pandemic.

“Our budgets, like our lifestyle, are likely to change over time, and it often takes some trial and error to understand what is realistic and sustainable,” says Anastasio. “Do not beat yourself up if you can not stick to your budget perfectly right away, and allow changes based on how your goals and desires change over time.”

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