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How to bounce back financially after COVID-19 pandemic

The pandemic forced millions out of work, causing people to dip into savings or go into debt to make ends meet.

TAMPA, Fla. — More than 20 million people have lost work because of the coronavirus, meaning many are struggling to rebound financially as things begin to transition back to the way they were before COVID-19.

Many families have had to dip into emergency funds or take on extra debt to make ends meet. So, as people had back to work, financial experts say now is a good time to take a look at your budget and make changes that will help you in the long run.

Analyze your spending

Take a moment to pull up your bank and credit card statements for the past six months. Go line by line and identify what spending was an absolute need and what spending was a 'want.' By separating your spending into wants and needs, you can determine where to trim down some of your spending. 

"People will find that it can uncover and free up amounts of disposable income they can re-channel into savings, into an emergency fund, into paying down debt and other places," said Rick Salmeron, a certified financial planner. 

Shop smart

For the purchases you absolutely need to make, take the time to save yourself some money. For example, when it comes to groceries, take a look at weekly ads from different stores to find out what's on sale. You may end up shopping at a different store than you usually do to save a few dollars or to stock up on essentials. Clip physical coupons and download store apps to tack on digital savings too. 

For things like bill payments, you can talk to your electricity company to work out a fixed payment plan so you're not surprised each month by the amount you owe. You can also talk to your bank or loan servicer to try and refinance the interest rate on things like your personal or car loans.

Realize what you've learned

Spending has changed for a lot of people during the pandemic, in both good and bad ways. Take a moment to understand what you've done well—maybe spending less on your morning coffee because you're making it at home or spending less on clothing purchases. Look at the changes that have saved you money and if it's possible, do them more often.

 "Identify one or even two great spending habits you can now incorporate into daily life so there's no room left over for bad habits," said Salmeron.

Know how much to save

If you dipped into your emergency fund to pay off debt or to make ends meet, that's totally okay. That's what that money is there for. As you begin to save more and rebuild those accounts, understand there's no one-size-fits-all approach. Different families will be able to save different amounts of money and the amount of money you want to save can differ too. Don't compare yourself to others. Some families may feel safe with a couple of months worth of savings, others may want to be more conservative and strive for more. A good benchmark is to try and have three months' worth of expenses saved up in case of emergency.

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