There’s no doubt 2020 has been one of most unsettling years in recent memory. For many, it’s meant job loss or reduced income. And even if you’ve maintained full employment over the last several months, staying focused has been challenging. All this has led to people making some common pandemic money mistakes. Let’s see what they are, and how to get back on track.
When things are unsettled, it’s easy to slip into an “anything goes” mentality, and that’s particularly true when it comes to finances. Even many committed budgeters have let their discipline fall away during these uncertain times. But planning and maintaining a budget is actually one of the best things you can do to regain a feeling of power and control. While the world outside might be going crazy, it’s entirely within your power to keep track of how much money you have coming in, how much is going out and knowing exactly where it’s going.
Not Setting Aside Savings
In keeping with the anything goes theme, many regular savers have let that habit slide during the pandemic. We can understand that if you’ve experienced income loss and need every dollar to make ends meet. But if you’re fully employed and continuing to bring in the same take-home pay, it’s time to get back into the habit of paying yourself first. If anything, the pandemic has shown us how important it is to have a fully funded emergency savings account ready to go.
Shopping from Stress or Boredom
Online shopping has increased 125% year-over-year and it’s easy to see why. For those of us who were (or still are) spending most of our time at home, it’s the only way to get groceries, cleaning supplies, and other necessities. But for many, online shopping has gone well beyond acquiring needs and straight into satisfying wants. In fact, it’s one of the most common pandemic money mistakes.
Since we’re all bored and stressed to varying degrees, shopping online is an easy, quick fix to feel better for a little while. But spending on things you don’t need can quickly lead to financial hardship, not to mention adding clutter to your living space, which in itself causes stress. Next time you feel like browsing to relieve boredom, try reading a book, watching a movie, or video chatting with a friend instead.
Taking On New Debt
If you’re struggling financially, receiving pre-approved credit offers can seem like a lifeline. But if possible, you should avoid taking on new debt right now. You could easily run up thousands in charges that could take you years to pay off.
Even if you’re financially stable, try to minimize taking on any new debt. There’s a lot of temptation out there, such as zero-interest for six months on new cars. It may seem too good to pass up, but the economy is still in flux and it’s best to wait it out until things stabilize.
Not Making Financial Goals
It’s hard to plan when the future looks so uncertain. But that doesn’t mean you should stop pursuing financial goals. They don’t have to be major to be meaningful. Even simple things like saving $20 from every paycheck for emergencies or paying $10 more than the minimum payment on your credit cards every month can add up to meaningful progress. Like budgeting, continuing to make and meet financial goals gives you a sense of being in control when the world is anything but.