4 Ways to Reestablish Your Personal Finance in This Economic Recovery

• Author: Jacob Greene
• Posted: 2024-08-13

After the COVID-19 pandemic wreaked havoc on personal and business finances for over a year, the economy is finally roaring back to life in the United States. Months of lockdowns caused many businesses to be forced to lay off millions of workers, which lowered people's buying power, which then caused ripple effects across the entire economy. Moreover, people decided not to spend money in environments where they could have been more likely to contract the virus, which caused even more pain for businesses and their workers. Government aid was not enough for many small businesses to survive.

However, with the massive proliferation of COVID vaccines across the nation, the majority of adults in the United States are protected from the deadly disease. People are going back to work and starting to buy goods and services again, and the economy is showing amazing signs of progressive recovery. Unemployment numbers have fallen to pandemic lows as the new job numbers are continuing to rise. As COVID-19 recedes in the United States as more people get vaccinated, your finances may need some reevaluation to adjust to the impending economic boom in recovery from the pandemic recession. Here are four ways to reestablish your personal finances in this post-pandemic economic recovery.

Reduce Your Debt

Paying down your debt is an important way to get pressure off of your shoulders and have more money to spend to put into this growing economy. Before making large purchases that you have desires for, first you should get rid of your existing debt to get out from under its weight. After you reduce your debt load, you will be freer to buy new things or make investments, so you can get more money in the future. Moreover, with abundant government assistance such as previous stimulus checks and the new child tax credit, many Americans now have extra cash to pay down debt. It is simply a smart move to set you up for more success in the future.

Reassess Your Financial Targets

Due to the onset and continuation of the COVID-19 pandemic and its resulting economic recession, many people had to revise their financial goals due to external factors such as income disruptions or job changes. Many simply did not have enough money in their pockets to make significant purchases, such as a new house or car. As a result, demand for those things plummeted throughout the pandemic, causing prices to crater. However, once people got vaccinated and went back to work, they finally got back into the market to make those purchases, and car and real estate prices have skyrocketed since then. This is an example of how the current economy is very different from that of before the year 2020. To adjust to the new economic reality, you probably need to change your goals to adapt. This includes other financial matters outside of purchases, including savings and investments.

Revise Your Personal Budget

Much like how the prices of real estate and cars have gone way up from 2019, other goods and services have changed in value since the economy has come back to life. General inflation is up several percent since pre-pandemic levels because of how fast the economy is growing. It is a natural transitory economic phenomenon, but in the meantime, you need to adjust your spending to take into account the changing market. You may need to plan to spend less if the goods and services you need have gotten more expensive. However, many people were forced to spend less money during the pandemic because what they wanted to buy was either closed or unsafe due to the virus. As a result, they inadvertently have more money left over from the previous year. For those who have extra money in their pockets, they should also revise their budget to allow more leeway for spending. Regardless, everyone who had any change in their finances during the pandemic should reconsider their goals.

Build Your Savings Back Up

Many workers who lost their jobs during the pandemic needed to dig into their emergency savings to make ends meet while they were unemployed. Since unemployment is way down and the economy is thriving again, a smart strategy to prepare for another crisis in the future is to rebuild your emergency savings. Economic downturns are a natural occurrence, so having a personal rainy day fund is extremely important. Moreover, scientists say that COVID will likely not be the last pandemic in the near future, so being prepared is necessary to get through anything that comes your way.