Work and Money
5 Ways To Recover From Financial Loss After the Pandemic
Over the last year and a half, so many suffered financially due to the pandemic. Businesses shuttered and employees were furloughed or laid off, resulting in about 255 million full-time jobs lost. In an effort to help people get back on their feet, Certified Public Accountant Wendy Barlin founded About Profit. This year, Barlin helping rebuild financial health for people who were affected by the global pandemic.
CircleAround asked Barlin for five tips on how professionals can have a financially brighter future in the aftermath of COVID-19.
1. Balance Your Debt
Everyone would love to have all of their debts paid off but, in some cases, it’s ok to retain debt if you are building up your savings at the same time. Being debt-free is great until you lose your job or need surgery, and you don’t have money saved to cover expenses. “You will end up in debt again,” Barlin says. “It’s better to slow down your debt payments and balance it with savings.”
Student loans are a great example: currently, federal loan repayments are paused until October 1, meaning borrowers are not penalized for non-payment, and no interest is accrued either. Put your student loan payments into a savings account to rebuild your rainy-day fund, and focus on paying off your student loans at a later time.
2. Rebuild Credit
“If your credit score took a hit in 2020, now is the time to get it back up,” Barlin states. In her opinion, a perfect credit score is made up of a car payment, rental or mortgage, and at least three active credit cards. “To build up credit again, you want to use credit cards,” she adds, “and pay the credit cards down each month.”
This method can be very useful as long as you don’t spend more than you’re able to pay down. Keep an eye on your checking account to ensure both your income and your credit are balanced and stable. If you have accrued debt on multiple cards, it can help to consolidate debt on a balance transfer credit card with a long 0% APR intro period.
3. Create a Weekly "Money Day"
Financial recovery requires time, patience, and routine. “Set up a weekly 30-minute money day. This is one day a week where you will take care of your money, the same way you brush your teeth or work out,” says Barlin.
Barlin advises taking a look at your bank accounts, making a cash flow plan for the week by assessing the money coming in and going out, checking on upcoming bills or expenses, and coming up with an overall spending plan for any expenses that are not recurring.
4. Leverage Slush Funds
Even if you’re not necessarily in debt, you should think wisely about the extra income you may have saved this year. “You can leverage this money through investments, like buying a home, or looking into the stock exchange,” Barlin suggests. “Don’t spend it on everyday things, but don’t leave it in a checking account either, where it won’t earn interest.”
5. Don’t Blow Through Your “Fun” Money
You may have accrued more cash from limiting your socialization over the past year, and it can be tempting, and easy, to spend it now that businesses like restaurants, concert halls, and movie theaters are beginning to open and vaccinated friends are able to safely meet up.
“Be careful not to jump in too quickly,” Barlin states. She suggests looking at socialization from a build-up point of view. Plan your outings gradually so you still have money saved. “If you love trying new restaurants, set a goal to try one a month, not five.”