While the pandemic caused financial stress and uncertainty, it also led many consumers to form new financial habits worth keeping, including saving more and spending less. A NerdWallet survey found that most people who formed new financial habits plan to continue them into 2021.
Here are five habits to consider sticking with even as life returns to normal:
1. SPEND LESS, SAVE MORE
For many Americans, spending less amid the pandemic came naturally because of income loss or fewer spending options after restaurants and travel largely shut down. NerdWallet’s survey found that among those who said they picked up new financial habits during the pandemic that they plan to carry into 2021, 58 percent said they were cutting back spending on “wants” and 36 percent said they were cutting back spending on “needs.”
“If your job was eliminated or your pay was reduced, then you’ve probably decreased spending and gotten used to a lower monthly budget,” says Eric Simonson, certified financial planner and owner of Minneapolis firm Abundo Wealth. “As soon as that income returns, it would be an amazing opportunity to keep expenses the same but save all of that new income.”
Natalie Slagle, founding partner at Fyooz Financial Planning and a CFP based in Rochester, Minn., says, “For those who were furloughed or laid off, the No. 1 priority is replenishing savings.”
2. STICK WITH A BUDGET
In the NerdWallet survey, 39 percent of those who adopted new habits that they plan to carry into 2021 said that one of those habits was sticking to a budget.
“So many people have looked at their budgeting and spending during (the pandemic), often for the first time,” Simonson says. “It’s important to stick with this post-pandemic, since keeping a budget is part of a healthy financial plan.”
Continuing to budget makes it easier to generate long-term savings and avoid debt.
3. LIMIT TRAVEL EXPENSES
Among survey respondents, 40 percent said one of the new habits they plan to continue was cutting back on travel spending.
“One reason we saw our clients enjoy lower expenses (during the pandemic) is because they didn’t go on their planned vacations,” Slagle says.
4. EARN EXTRA INCOME
Based on the study, among those who developed new financial habits, just over a quarter said they picked up a side hustle or extra work to make money. Kevin Mahoney – a CFP and founder of Illumint, a financial planning firm for millennials – says earning a side income can help provide financial stability during uncertain times.
5. USE AUTOPAY FOR BILLS
Ashli Smith, an Atlanta resident and mom who tweets about personal finance, says she plans to continue using autopay for bills, even when the pandemic is long over. In some cases, autopay comes with a small discount, too.
