Since the start of the pandemic, Americans have endured an economic rollercoaster with fluctuating interest rates, massive layoffs and skyrocketing inflation. It’s no surprise, then, that around half of non-retired adults say the pandemic has made it harder for them to achieve their financial goals, according to the Pew Research Center.
So how can you best manage your finances in today’s uneasy economy? GOBankingRates spoke with several financial experts to see how the pandemic has changed their money advice.
Be Careful With Easy Online Spending
When lockdowns began, in-person shopping shrank while online shopping rose to new heights. In 2020 alone, e-commerce sales increased by 43%, according to U.S. Census data.
But the ease of online shopping can also make it more tempting to spend, said Tom Siomades, CFA and chief investment officer of AE Wealth Management.
“I believe the pandemic has further eroded people’s ability to gauge value and their view of money,” he said. “The pandemic accelerated all things online. People want stuff now, paying with electronic money. They no longer save or, worse yet, have the discipline to save. They don’t consider the cost–only convenience.”
While many Americans have increased their online spending, Brian Meiggs, founder of the personal finance site My Millennial Guide, said the pandemic is also forcing people to take a more practical approach to their personal finances.
“The pandemic has highlighted the need of having a budget, building emergency savings, and creating a financial plan that suits their lifestyle,” he said.
Timeless Financial Management Principles Still Apply
Christopher Drew, an investment advisor representative with Drew Capital Management, believes it’s more important than ever to follow timeless money management principles. With inflation at astonishing highs, Drew encourages his clients to spend less and save more.
“Be more cautious about your spending habits due to the increase in inflation,” he warned.
For some, this may simply mean changing what you spend money on. For example, since the start of the pandemic, Meiggs has shifted his spending focus from material things to his future.
“I have started to save more and invest in things that will grow my wealth,” he said. “I have also become more mindful of my spending and focus on needs rather than wants. Before the pandemic, I would impulsively buy things that I wanted without thinking about it. Now, I take the time to consider whether or not I need something before making a purchase.”
Stay in Touch With Your Financial Advisor as Markets Shift
It’s a good idea to work with a financial advisor who stays up to date on the market and understands how economic shifts can impact your investments. But simply hiring an advisor isn’t enough. Be sure to stay in contact with them so they can adjust your investments based on the market and your needs.
“Because of economic factors affecting the market in today’s environment–such as interest rate hikes, the war between Russia and Ukraine, and a massive spike in inflation–we have had to make adjustments to portfolios along with asset allocation changes to help reduce the overall volatility of the markets,” Drew said.
Focus on Saving and Investing for the Long Term
At the beginning of the pandemic, interest rates sank to an all-time low. As a result, it was a great time to leverage short-term loans to buy real estate or businesses.
Now, however, as interest rates rise rapidly and show no sign of stopping, experts are advising the opposite. Instead of looking for short-term loans, focus on savings and long-term investments.
“When interest rates rise, both businesses and consumers will reduce their spending due to higher borrowing costs,” Meiggs said. “This will result in lower earnings for growth companies, and stock prices will decline. However, if you’re invested for the long term, rising interest rates won’t have a significant impact on your portfolio. Instead, focus on saving more and diversifying your income.”
Reassess Your Priorities If Necessary
Since the pandemic began, Meiggs has noticed a shift in perspective as many people begin questioning what’s most important in life.
“Working from home and having more time with family has made people reassess their priorities,” he said. “The pandemic has also resulted in a change in how we view our time and prioritize it. Instead of trading time for money, we now prioritize experiences over things. This change in mindset has led to a change in how we view and manage our finances. We are now more mindful of our spending and focus on creating memories instead of acquiring things.”
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This article originally appeared on GOBankingRates.com: How Has the COVID-19 Pandemic Changed Money Advice?