Strategies for Rebuilding Finances
Financial Rebuilding After the Pandemic
The economy is improving with more people returning to the workforce and earning better wages. But that does not mean the financial malaise of the COVID-19 pandemic is over. After all, 373,000 people filed for initial unemployment claims last week and 3.34 million people are still receiving unemployment benefits.
Millions of Americans are struggling to get back on their feet and to rebuild their finances after months of shutdowns and unemployment. For the latter group, they have to take steps to get back on their best financial footing. From rebuilding emergency savings to conducting a budget check, here are some steps to consider.
Rebuild Emergency Savings
Rebuilding an emergency fund should be a top priority. If calamity strikes, individuals have to ensure they have enough money in the bank to cover expenses. The general rule of thumb is to have three to six months of expenses in an emergency fund set aside for a rain day.
In addition to shoring up emergency savings, paying down high-interest-rate debt should also be on the top of the list of ways to improve finances. That is particularly true of individuals who relied on credit cards to survive the pandemic.
Rethink Spending
As the economy recovers from the pandemic, inflation has been rising, which means prices for everything from milk to lumber are higher. As a result individuals want to revisit their budgets to ensure their spending matches the current cost of living. That means factoring inflation into the budget. It is also important for people to resist the temptation to overspend amid excitement about the pandemic coming to an end.
Vaccinations are widely available and the job market is improving as millions of people return to work. Rebuilding finances requires a plan that includes shoring up savings, paying down debt, and factoring the costs associated with daily living.
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