How to reboot your budget for a post-Covid-19 future

Picture cruising your car deep into 2021 and never glancing in the rear view mirror. Vaccines, travel and a hope of normalcy are finally on the horizon. With so much to look forward to in the future, it’s understandable to not want to look back. But returning to typical day-to-day life will be a transition. And from a financial standpoint, you’ll want to assess your past budgeting behaviour to prepare for more normal days ahead. Last year’s spending didn’t look like 2019. And 2021 won’t look like 2020 or 2019. But you’ll need this historical insight to inform your future spending, especially as you start reintroducing expenses that used to be ordinary, such as concert tickets, plane tickets and so forth. Some people’s spending decreased dramatically last year (either from necessity or choice). But others faced comparable expenses, says Molly Laughter, a certified financial planner and founder of Laughter Financial in Dallas. Remember that jungle gym for the kids to play on in the backyard? Or the Xbox for long nights of playing video games? They may have been great ways to keep you occupied and comfortable at home, but now you’ll need to find a way to balance these newer expenses with your past spending on the activities you hope to return to. Ms Laughter suggests using this opportunity to also review year-end financial summaries from your credit cards and bank accounts. Size up each category. How much did you spend? Was it worth that amount? Would you want to continue spending that much? Ever since Covid-19 became part of our vocabulary, there’s been talk that life would never return to normal. Ms Laughter anticipates your future spending will be a “new normal”. Sure, you may introduce dinners out – and possibly even a trip – to the mix, but expect to continue paying for quarantine life staples such as deliveries and at-home activities. “There is going to be a paradigm shift with respect to how budgeting in the future will be compared to how it was pre-Covid,” says Vid Ponnapalli, a certified financial planner and owner of Unique Financial Advisors based in New Jersey. This new balance means you’ll need to play favourites with your finances. After all, you can’t keep up the amount you’ve been dropping on at-home entertainment and food deliveries while also upping the amount you spend on indoor dining and live shows. It just won’t all fit in the budget. Select the expenses you benefit from most. To make the necessary adjustments, Ms Laughter suggests looking at the big picture. Don’t get too caught up in specific line items. For example, if you’re spending 25 per cent less on grocery orders, you don’t have to redirect that exact amount to dinners out. Instead, once your needs and savings are accounted for, set an amount you can afford each month for discretionary expenses, then spend it on whatever you want. You may never add back in some things you used to spend money on. As Mr Ponnapalli says, we’ve all figured out new ways to spend less money and still have fun. Dropping thousands of dollars on concert tickets may not feel worth it anymore when you compare it with watching a (much cheaper) livestream at home. Life hasn’t returned to normal by any means. But for many, the prospect of getting a vaccine is mere weeks or months away. Use the time between now and then to prepare for what’s to come. Ms Laughter says to think of it like advance notice. “The vaccines aren’t getting out as quickly as we’d like,” she says. “So start your clock.” Begin setting aside a certain amount monthly to accomplish a goal when it’s all said and done. For example, if you want to travel again by a certain date, use the next few months to funnel funds into a designated savings account. If your student loan payment is on hold, make a plan for how you’ll strategically spend those extra funds in the meantime. And prepare for that added bill when it’s reintroduced. Whatever financial decisions you make, remember, whether we’re in a pandemic or not, the fundamentals of finances don’t go away. Spread your money between things you need, things you want and savings. Your allocations may change, but “the name of the game is the same as it was before – budgeting, budgeting, budgeting”, Mr Ponnapalli says. Here’s to better days and better budgets ahead. Associated Press

How to reboot your budget for a post-Covid-19 future

It’s good to assess your past budgeting behaviour to prepare for more normal days ahead