By Carmen Reinicke - CNBC + Acorns
As the number of people vaccinated against COVID-19 increases and the economy reopens, people may wonder what they should do to control their money during this recovery phase.
There are signs that the economy is about to take off.
Businesses across the country
are reopening
as states ease coronavirus-related restrictions, and employers are rehiring.
Nonfarm payrolls rose 916,000 in March and retail sales grew nearly 10% after the third round of stimulus payments.
At the same time, weekly jobless claims fell to 576,000, still a huge number but the lowest since the pandemic began.
"
I think the economy is ready to go
," Federal Reserve Governor Christopher Waller told CNBC, "there is still more to do about it, but I think everyone is feeling much more comfortable having the virus under control, and we are starting to see it in the form of economic activity. "
[Families will receive a new stimulus for children of up to $ 3,600. What should you do with that money?]
Still, many households continue to grapple with the impact of the pandemic and will do so for many years, even as the economy recovers.
And even those who weren't as affected by COVID-19 may have to reassess their finances, as the closings have changed spending habits and priorities.
In addition, money experts say that, having been caught by surprise by the pandemic, many people may now be more vigilant to
prepare for the next possible economic recession
.
Here's what experts recommend that people focus on as the economy recovers:
1. Rebuild emergency savings
The pandemic came as a complete surprise and showed many people how unprepared they were to cope with an emergency.
Now, as the United States rebuilds its economy and more people are back to work, bolstering emergency savings should be a priority.
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"
Financial best practices hold true
in good times as well as bad times," said Mark Hamrick, Bankrate economic analyst, "We strongly advise making emergency saving a priority."
A general rule of thumb followed by many financial experts is that people should have three to six months of living expenses in an emergency savings fund.
But 13 months after a pandemic that has put millions of people out of work, people may be rethinking their savings goals.
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"That should make
people think twice
, and really reflect on their own specific situation," said Dana Menard, financial planner and director of Twin Cities Wealth Strategies in Maple Grove, Minnesota.
Depending on your career, your industry, your family, and your specific needs, some people may want to save more - or even less - in an emergency fund to prepare for the next event.
"
Three months is just the starting point,
" says Tania Brown, director of SaverLife, a nonprofit organization focused on savings.
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2. Pay off debts
Another top financial goal that experts recommend is debt repayment, especially for those who may have bought more to
stay afloat during the pandemic.
"If you took on a $ 25,000 debt, you can't manage your finances as if you didn't have $ 25,000 in debt to pay," Brown said.
That means
people should come up with a plan to pay off
debt using one of many strategies, such as paying off high-interest debt first or focusing on debt that is easier to eliminate quickly.
Now is a good time to plan for debt management, according to Brown.
In recent months, with the third round of stimulus checks and tax refunds, families especially could have thousands of extra dollars to meet these needs.
Of course, some people may want to pay off their debts before accumulating savings for emergencies or working on both goals simultaneously.
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If people can afford to
work toward multiple financial goals
at once, they should, Menard said, adding that not everyone has that ability.
3. Reformulate your budget for the new normal.
The past year was unusual, and for many it meant drastic changes to their established budget.
Whether people lost their jobs and had to search for other sources of income or found they had extra money from trip cancellation, budgets may need to be updated.
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This is also important when people begin to rejoin the world as it opens after the pandemic.
They must be very careful
not to let their enthusiasm lead them to overspend
, Brown said.
It is also a good idea to check if the cost of certain goods and services is the same or has changed due to the pandemic.
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"
Keep in mind that inflation can increase the cost of things,"
said Marisa Bradbury, CFP, CPA and investment advisor at Sigma Investment Counselors in Lake Mary, Florida.
"Really consider what that inflation is going to be - what you think you had budgeted for earlier might not be enough," he added.
If you have money to spend on fun things like entertainment, shopping, or travel, Bradbury recommends reviewing your budget and setting aside a specific amount to avoid overspending.
This is especially important for retirees living on a fixed income, says Bradley.
4. Recalibrate and review your financial goals
As the United States moves away from the pandemic, people should also reassess their long-term financial goals.
The past year set millions of people back in many ways, and for some that meant putting off goals like buying a home or car.
"If it's their turn in 2020, they
may have to delay retirement for
a couple of years - it's okay," Brown said, "they may have to address some of those financial fundamentals first."
[Biden's new stimulus plan will not raise taxes on you. But this is what you need to know]
However, even if the economy recovers, a return to pre-pandemic finances will not happen overnight, according to Brown.
And people must be aware of it and adjust their expectations.
"What worked in 2019 or even 2020 may not work now,
" he concluded.
This article is part of the Invest in You Ready series. Set. Grow (Invest in you: Ready. Done. Grow), an initiative of CNBC and Acorns, the microinvestment app. NBC Universal and Comcast Ventures are Acorns investors.
