3 focus areas to get your finances back on track
(BPT) - The COVID-19 pandemic has hit many people hard financially. From furloughs to job loss and from strict budgets to depleted savings and much more, people are making adjustments as needed. It's important to stay focused on your financial well-being and take simple steps so you can recover and thrive in the future.
"Many people who have experienced financial disruption need some help to get their savings back on track," says Andy Harmening, Consumer and Business Banking director at Huntington. "Even in a strong economy, managing everyday finances can be stressful. Fortunately, with a little diligence and some digital tools that make it easier to save, people can find the financial peace of mind they’re looking for.”
Harmening says it is possible to improve your finances in a post-COVID world by focusing on three key areas:
Create an updated, agile budget
Your income may change, so it's important to understand your spending habits and create a realistic budget. Track all your spending for a month and separate out necessities versus nice-to-have items. You can also input your income and expenses and let an online budget calculator do the math.
Keep in mind variables due to the pandemic that may impact your budget. For example, a shorter work week, lower gas prices, more money on groceries and perhaps less money eating out. You'll want to incorporate these positive and negative changes, and if possible, leave some wiggle room for future changes. Additionally, some things like gym memberships and parking passes may have paused when the pandemic started but are now being charged again. Sophisticated online banking solutions, such as a spend analysis tool, can give you an eye-opening look into how your spending adds up so you can make smart adjustments.
Replenish emergency funds with smart tools
Many people have tapped or even drained their savings to make ends meet as the pandemic hit. By updating your budget and getting ahead of spending, you can start to replenish emergency funds. Saving even a small amount regularly can help create an emergency fund that will put you in a better position to handle the potential of future financial challenges.
Small amounts over time — even just $5 — can add up to a robust emergency fund that provides peace of mind. Money Scout by Huntington is a new tool customers can enroll in that analyzes spending habits, income, and upcoming expenses and finds money you’re not using in your checking account. Then, it moves that money, from $5 to $50, automatically to your savings, up to three times a week. Bit by bit, it will help you build savings.
Automate bills and pay down debt
To keep your credit healthy, take steps to pay your bills on time and start reducing debt. A good first step is to automate wherever possible. Direct deposits and automatic bill payments ensure nothing gets overlooked or falls through the cracks in spending and saving.
If you’ve leaned on your credit cards during the pandemic, pay down the debt with the larger interest rate first to avoid wasting dollars on paying interest, even if that means paying smaller debts first. This will help you save money in the long run.
Keep in mind, it can be tempting to tap into money set aside in a retirement plan to cover expenses, but even if that can be done without a penalty, it can rob you of potential financial security down the road. If you need to pause contributing to a retirement plan temporarily to get finances back on track, that's OK. But avoid borrowing from these accounts and start contributing to them as soon as you're able to set yourself up for a bright financial future.