This year has been one for the record books. And while there has been lots of pain and suffering due to the Covid-19 health crisis, there has also been lots of reflection and prioritizing.
We’ve also seen historic changes as it pertains to our personal and household finances.
Here are some of the trends we’ve seen emerging thus far:
We’re downsizing our budgets
In the new world, income has vanished or been reduced for millions of Americans so we’re doing our best to save what little we have coming in the door, and cautiously monitoring what’s going out.
You might argue that saving has gotten “easier” since we’re not dining out, not commuting, not traveling, not entertaining, not going to the gym, and not buying any new clothing, but we’re really just focusing on an extremely downsized budget that includes not much more than essential commodities and utility bills.
Our appetite for risk is decreasing
In March of 2020, the stock market hit a rough patch investors hadn’t experienced in over a decade: a bear market. That’s defined as a period when stocks lose 20% of their value or more. This may have presented some investors with portfolio-building opportunities, but others saw this as worrisome and decided to get out of the market altogether. Granted, the stock market has recovered a large chunk of its losses from March, but fears about the extent and duration of the crisis has some still avoiding risk altogether and sticking with cash.
Financial planning has become a priority
Many Americans were caught off guard when the pandemic hit. They didn’t have the emergency fund established, hadn’t been shoring up the retirement accounts, and hadn’t given too much thought, in general, about any financial goals, whether short or long-term.
Fast forward to now and we finally see the value of proper planning. It has become a priority.
There’s a growing interest in financial therapy
The financial therapy field, which initially became relevant after the 2008 recession, is booming once again as the pandemic continues to increase money anxiety.