You saved some money – Yay! Now what?

By Allan Kunigis

Allan Kunigis is a Canadian-born freelance financial writer based in Shelburne, Vermont. He has written about personal finance for more than two decades. He is the author of A Kid’s Activity Book on Money and Finance: Teach Children About Saving, Borrowing, and Planning for the Future, published in September.

It might be a stretch to say there’s a positive aspect about the dreadful Covid-19 pandemic that we’ve been living through since early March. But there is at least one plus. A lot of us have been spending less money than usual.

Of course, not everyone has more money once all is said and done, or bought and paid for. Consider the millions of people worldwide who have lost jobs or earned less money because of the economic upheaval caused by Covid-19. Directly and indirectly, so many of us have been affected. When was the last time you dined out, attended a concert, or vacationed?

And I won’t address the enormous suffering ofpeople who have had Covid or have lost loved onesto the cruel disease. Then there are the countlessexhausted and depleted front-line heroes. This hasbeen a nightmare, clearly. And it’s not over.

ON THE BRIGHTER SIDE…

But let’s shine a more positive light on one aspect:If you still have a job and have earned roughly thesame amount as before Covid hit, you may have beenable to save money or at least rethink how you spendit. Two-thirds of Americans said they were spendingless according to a survey last August by AP-NORC, aresearch group at the University of Chicago.

Many people have traveled less, dined out less,and spent much less on leisure and entertainment activities, albeit reluctantly. Let’s assume that youdidn’t take your annual vacation. You most likelyhaven’t sat regularly in a nice restaurant and orderedan expensive bottle of wine with your meal. You might be saving a lot of money ordering in, cooking more, and buying your wine retail at far less than you’d pay at your favourite restaurant.

As we enter a new year, it’s a great time to reflecton your changing finances and be deliberate and thoughtful about how you want to save, spend, or redirect some of these 2020 savings. And, of course,while vaccines appear to be on the verge of wide distribution, heralding a return to greater normalcyin the coming months, things might not get back to “normal” (whatever that is) right away. So, likeit or not, the months ahead might offer additional opportunities to save money.

Here are some steps to consider in your CovidMoney Makeover:

1. CRUNCH SOME NUMBERS

Tally what you had spent in a typical month in various categories before Covid hit and what you have spent over the past 10 months or so – from

March through December. Some of us are better attracking expenses than others. But it’s not that hard,especially if you pay for items in a way that’s easyto track. For example, I put all or almost all of my groceries and restaurant expenses on my credit card. That makes it easy to tally what I spend on eachcategory each month.

So, all you need are four columns on a sheet of linedpaper (I’m old school) or use an app or software thatmakes this really easy. For each category, tally the“before” and the “after” and subtract (or add) thedifference. You should be able to verify your total monthly savings with your bank balance.

2. REALLOCATE YOUR EARNED SAVINGS

I say “earned savings” because you deserve somecredit even if it was weird providence that helped you save, rather than sheer discipline and Herculean restraint.

After you’ve taken your bow or received your Best Saver’s Award, now take some time to reflect on what you’ll do with this found money. Some ideas:

Save it. Stash it away in your retirement account,rainy-day fund, or your grandchild’s college account. You’ll eventually spend it but you don’tneed to do so now. For now, cherish these hard earned or hard-not-spent savings.

Spend it on something special. Maybe you’vealready found a great goal for this repurposed money. Some friends shared how they redirected their money: One put every penny saved from not traveling or going out in the evenings into backyard renovations, including a pool (“We have less money, but we’re staying sane!”). Another said she and her husband “spent the money saved and a lot more on a garden redesign, expensive wine, handbags, and some charitable donations.”

It’s certainly not hard for many of us to find new ways to spend our money. And it makes perfect sense that if we’re spending more time at home, wewant to enjoy that home more and we’re willing tospend the money as appropriate.

If you still have a job and have earned roughly the same amount as before Covid hit, you may have been able to save money or at least rethink how you spend it.

3. REV UP YOUR SAVINGS EVEN MORE

Sure, we’re hard-wired to spend and as evidencedabove, we don’t need an invitation to find new things to spend on, but what about doubling down and using the savings discipline to save more? Maybe you can salt some money away for a very clear purpose. That might be a really nice vacation in 2022, once the world gets back to normal.

What if you took what you did or learned in 2020 and gave yourself a challenge? Get serious and seewhat you can save in 2021. They say, “Knowledge is power.” True. And so is money. Or at least having money on hand gives you options or flexibility, and that can be powerful, too.

And just bolstering your emergency savings fundcan be a highly valuable thing. Maybe you’re nearing retirement and even though all was well for you financially in 2020, that might not be the case in 2021. If you have less than the recommended three to six months worth of living expenses stashed in a liquid (easy to access quickly) account, this should be a top priority. If not now, when the saving is easy,when?

4. PAY DOWN YOUR DEBT

If you have any outstanding debt, consider “retiring it” or paying it off with your Covid savings. It could be credit card debt that’s costing you dearly in high interest rate charges or perhaps a car loan, or any type of debt. Here’s your chance to wipe it off the books.

5. RECONSIDER ITEMS YOU USED TO TAKE FOR GRANTED

Maybe you lived most of the past year without your gym or yoga studio membership. If you’re like a lot of people I’ve observed, you spent more time outside in nature, albeit with appropriate social distancing and mask wearing. I have never seen so many people running, walking, cycling and hiking.

I’m all for supporting local businesses, and I actually retained my local athletic club membership because I really want my gym to survive Covid along with me, my friends, and my family. However, I suspended my membership at a Pilates studio, saving $89 a month, or more than $1,000 annually. I’ve missed those good, hard core workouts, but there are so many other free and safer options to raise a good sweat.

Do what’s right for you, whatever that is. But put some thought and purpose to it. There’s no better time than now to reflect and be thoughtful and purposeful about your finances. Here’s to a new year of being sensible about your dollars!