Creating Wealth Post Covid-19 is certainly a challenge but not insurmountable. The world’s economies have been sent into a tailspin – a very unexpected one – by the COVID-19 pandemic. And while some countries are beginning to see a light at the end of the tunnel in terms of virus control – the pandemic will leave lasting effects for years to come, including on many people’s finances.
History teaches us, however, that things will improve given enough time. It’s never a bad time to improve your financial situation, and by taking these three steps right now, and in the near future, you can take advantage of the opportunity to strengthen your finances and still create wealth in a post COVID-19 pandemic world.
The world has forever changed, new habits have been learnt and we must adapt to survive the new world order.
Creating Wealth Post Covid-19
Increase your retirement fund contributions
Although it may not seem like it, right now is a good time to invest in the stock market. When the market is down, stock prices are at their lowest — which gives you a great opportunity to buy low and sell high. The market will recover eventually, so by investing as much as you comfortably can now, you’ll see significant gains later.
How much you should invest depends on a few factors. If your employer offers matching contributions, aim to save at least enough to earn the full match. After all, those matching contributions are essentially free money, so it’s wise to take full advantage of them.
In addition, make sure any cash you invest is money you won’t need anytime soon. In other words, don’t invest every spare penny you have if you’re worried you may lose your job and need to pull your cash out of the stock market in the next few months or years.
Because stock prices are so low right now, that means it’s a good time to invest but a terrible time to withdraw your funds. So, before you invest, make sure you’re comfortable not touching that money for the foreseeable future.
Creating Wealth Post Covid-19
Review budget and cut any unnecessary costs
It’s never a bad idea to double-check that you’re not wasting any money, even if you are still ‘doing okay’ financially right now. Get serious about tracking your spending, as this gives you a good idea of where every penny is going. From there, you can comb through your expenses to see if there are any areas where you can cut back.
There’s a good chance your spending may have decreased over the last few weeks if you’ve rarely left the house, because you’re not going out to dinner or going to after-work happy hours anymore. But you may be able to save even more by making some other budget cuts.
Begin by cutting all of your unnecessary costs, such as the subscription services you never use. Next, focus on nice-to-have costs, such as non-grocery online shopping. You don’t necessarily need to eliminate these expenses entirely (as long as you can afford them), but if you’re trying to save more, see if you can cut back a little.
Creating Wealth Post Covid-19
Make sure you have a healthy emergency fund
Now more than ever, it’s vital to have a robust emergency fund. Even if you’re secure in your job and can afford to pay all your bills, you never know when things might change. By having a healthy emergency savings, it will be easier to avoid tapping your retirement fund or racking up debt if you lose your job or face an unexpected expense.
Aim to have enough saved in your emergency fund to cover around three to six months’ worth of general living expenses. And as you’re saving, keep your money in a high-yield savings account.
These accounts earn significantly higher interest rates than a normal bank savings account, so your money will grow faster and an additional benefit of this type of account is that, unlike a CD or money market account, you can withdraw your cash at any time without facing any penalties.
The economy may not be in the best shape currently, but things will improve given enough time. It’s never a bad time to improve your financial situation, and by taking these three steps right now, you can take advantage of the opportunity to strengthen your finances and build long-term wealth.
Financially Adjusting After Lockdown