TUCSON, Ariz. — More Americans are coming to terms that having an emergency fund is now a higher financial priority than it was before COVID, according to Personal Capital, a financial services website.
People are going on vacations again - travel is almost back to pre-pandemic levels. This is an example of folks who have cash and are ready to spend it after a tough 18 months.
“We are seeing folks now actually not only spending, but one of the most exciting things that have happened is that the savings rate is way up. So folks really did feel like they could pay down debt, they also can save,” said Tiana Ronstadt with Power Women Investing.
She says one of the things this trend is showing her is looking into how families can create or build their wealth with their savings. But on the other hand of building wealth are those who struggled financially.
“But many people, as we know, lost their jobs or were furloughed from their jobs. And so again, we saw some increase in savings, but also the increase or feeling of wait a minute when, am I going to go back or I’m actually earning a wage and do I look at savings as my emergency money or have I already spent it. So how do we then move ourselves out of that feeling of paycheck to paycheck that potentially,” said Ronstadt.
She says the economy takes a longer time to improve than it does to tank, but because of this huge shift in everyone's finances — she predicts seeing a notable increase in spending in September and October.
She has these tips to give for those who are looking to revamp their financial plans: “One you have to have short term savings, we learned the lesson. Do not spend yourself down to have no short-term savings go into the fall with some short-term savings. Two, start to build that credit or backup so that you can leverage credit in the future. And three review your cash flow and your expenses,” said Ronstadt.
She says to reevaluate what subscription services you tacked on to your budget because of COVID and stay-at-home orders. Every penny counts when looking toward preparing your finances for the future.