Money Blogs

Preparing your finances for a second wave and a new normal

Are you returning to work and preparing your finances for a second wave and a new normal? Photo credit: Storm Clouds by Scott Green @nesask.

Have you been preparing your finances for a second wave and a new normal? A lot of people are returning to work or are starting to receive government aid, and this has more than few people wondering “What should I do with my money now?” Even if you’ve been lucky enough to keep your job, answering this question is important. No one knows if there will be a second wave or how long government benefits will last. Therefore, it’s important to make the most of whatever money we may have coming in. Below are three things my partner and I have been doing to prepare for a second wave.

Decrease spending and increase savings:

During this health crisis my partner and I have been spending a lot less – no nights out, travel, or activities with friends or family. We’ve been cutting back on other expenses and are learning how to live on less too. The COVID-19 crisis forced us to seriously consider what was important and incentivized us to right-size our spending habits. Apparently we’re not alone, as the US savings rate has recently jumped to a multi-decade high.

Going forward, we plan on maintaining many of the habits we’ve acquired so far this year. Though we’ve both been lucky enough to keep working, this environment looks so dicey that even our currently “secure” jobs may disappear. If you’re not in a position to save at the moment, especially given the situation, do your best to take a close look at your spending and see if there’s anything you can adjust. Even the little bits we can save or divert today may help a lot tomorrow.

Increasing our emergency fund:

But what have we been doing with our savings? Why, putting it in our emergency fund of course! There it can make us a little interest and function as our first line of defense if we get into trouble. We’ve always kept an emergency fund tucked away, but this year we’ve been adding to it in earnest. If we both lose our jobs during a second wave, we want to have enough to stay afloat for as long as possible. After working ourselves out of debt and painstakingly building plans for our future, we want to avoid dipping into our investments or turning to debt in a pinch, if we have any other options.

Those wondering how big an emergency fund should be, where to keep it, or why its preferable to drawing down investments or debt can read all about emergency funds here.

Avoiding or paying down debt:

We’ve also doubled down on our debt avoidance. Paying interest on debt and owing money to a credit card company or bank can quickly make a bad situation worse. Warren Buffett, probably the greatest investor in history, recently spoke out strongly against using credit cards as a piggy bank (you can watch the full video here). Just remember, interest payments on debt are certain, but for the most part, interest on investments and even income from a job are uncertain – this mismatch can be costly.

If you do find yourself in debt, try to pay it off quickly, and focus on higher interest debts before moving onto lower interest debts. If you get into serious trouble, consider seeking out a professional to help – there are often consolidation or other options that can help smooth the way.

Final thoughts:

If you’ve found yourself wondering about preparing your finances for a second wave and a new normal, you’re not alone. Many people are wondering how best to prepare for another lockdown, or how to tighten up their finances in general. In my household, for example, we’ve been cutting our spending, increasing our savings, and adding to our emergency fund. We’ve also vowed to avoid unnecessary debt at all costs (been there, don’t want to go back!). Regardless of when or whether a second wave does engulf us, it appears we’re in for a new normal full of unexpected hurdles. Given all this uncertainty, the best preventative course of action is to sharpen up your personal finances.

If you’re wondering what else you could do, check out the seven financial rules I live by here, or read my first blog post regarding COVID-19 here.


Please keep in mind I am not a financial advisor and the opinions expressed are my own. My Money Moves does not provide financial advice – it is an informational website that details my own approach to my own money and personal finances. If you need specific financial help or guidance, please do your own research and seek out a professional who can work with you to reach your goals.

Here is ME share buttons:
Tagged , , , , , , , , , , ,

3 thoughts on “Preparing your finances for a second wave and a new normal

  1. Thanks for this article Phil! This pandemic has taught me a lot but one of the big wake up call for me was how much I carelessly spent on online shopping and social outings. I plan on putting more effort into saving even after the new normal is established.

  2. Good advice Phil! I’m curious to see what savings levels are like once restrictions lift, as that may be a better indicator of how much habits have truly changed. In my view a lot of the current savings are ‘forced’ savings since people can’t go to movies, can’t go to a restaurant, don’t have daycare expenses, aren’t paying recreation fess… etc. etc.

Leave a Reply

Your email address will not be published. Required fields are marked *