For many Americans, the financial impact of the COVID-19 pandemic has reached two different extremes. Those who were unable to work due to lockdown-related business closures, or who saw their wages cut due to reduced hours, could have faced financial devastation in the form of emptied bank accounts and growing debt.
On the other end of the spectrum, those who continued to earn regular paychecks because they could work remotely might have seen their savings grow fat because there was not much to spend during long periods of foreclosure.
Now that the United States is slowly emerging into a post-COVID economy, many Americans will have to reconsider their savings goals. Your own post-pandemic savings strategy will largely depend on how your finances were affected during the pandemic.
Americans who have had to dip into savings accounts should make it a priority to replenish their emergency savings, experts say. As noted in a CNBC article, many financial experts recommend saving three to six months of living expenses in an emergency fund to cover needs such as home payments, utility bills, insurance, and more. groceries in the event of a financial crisis.
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But in a post-pandemic world, this rule of thumb doesn’t necessarily apply to everyone. People who have been unemployed for long periods during the pandemic may have to reconsider how much money they should save. If you had to go into deep debt during the pandemic, for example, your first priority should be to pay off the debt.
âThe easiest way to make money is to stop spending money,â wrote David Kilby, president and CEO of financial wellness platform FinFit, in a column on the 19 May for MarketWatch. âEvaluate your outstanding debt and determine which debt has the highest interest / cost structure. “
Rather than following a hard rule of thumb about how much to save, people should “really think about their own specific situation,” Dana Menard, certified financial planner and founder and CEO of Twin Cities Wealth Strategies, told CNBC. This can save three months for some people and 12 months for others.
Amy Richardson, Certified Financial Planner at Schwab Intelligent Portfolios Premium, told Money magazine last month that a good post-pandemic first step is to make sure your overall financial situation is in order – not just in terms of rebuilding your health. your emergency fund, but also maximizing your 401 (k) plan and reviewing your own personal short and long term goals.
Meanwhile, Kilby offered these tips for saving money in a post-pandemic environment:
Look for high-yield checking and savings accounts: The best places to find above-average annual percentage returns are small financial institutions and online banks.
Invest in CDs and Treasury Bills: You can find certificates of deposit at just about any financial institution. They offer a safe way to earn a higher APY on your money than with regular savings accounts. Another sure way to earn interest in a post-pandemic economy is treasury bills, or U.S. government bonds, when many people are still hesitant to take financial risks.
Look for tax-free savings accounts: These include retirement savings accounts such as 401 (k) and IRA plans. You can also look for tax-deferred investment accounts that tend to produce much better returns than traditional investments in the after-tax market.
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Last updated: August 2, 2021
This article originally appeared on GOBankingRates.com: What should your post-pandemic savings strategy be?