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The coronavirus pandemic is changing everything, including Americans’ relationship with money.

As people are forced to curtail everyday activities due to the pandemic, many have gotten a taste of saving money for the first time. Consumer spending, which makes up more than two-thirds of economic activity, plummeted 10.1% in the second quarter, the largest drop on record. In tandem, the savings rate (the portion of personal income going to savings) skyrocketed to an unprecedented 25.7%, compared to just 9.5% in the first quarter.

So despite widespread economic carnage, there’s a significant population of Americans who have managed to put money away for the future.

“This is a moment of opportunity,” said Bruce McClary, a spokesman for the National Foundation for Credit Counseling. “If you’re in that situation, you can think about what to do to help that money grow, to put that money aside, to keep it for a substantial safety net for emergencies in the future. It’s nice to commit some of that to some fun activities, but the majority of that money should be kept in savings.”

As stores and restaurants reopen in some areas of the country, increasing the temptations to spend, it’s vital to keep the savings ball rolling, especially with the importance of having an emergency fund clearer than ever.

While it may not be realistic to think you will permanently keep your spending as low as it’s been while you were staying at home, there are plenty of tactics you can use to maintain your new attitude about savings even as normal life resumes.

Habits are at the heart

Habits are like muscles — they’re trained over time and don’t just form overnight. But strong habits are at the heart of successful budgeting. When working on your financial habits, it’s important to figure out what works best for you, and be flexible with yourself without completely derailing from your goals.

Habits don’t form accidentally. Being intentional, especially at the onset, and approaching budgeting with determination and consistency are vital.

“It’s crucially important that people set out their budget concretely, in writing. Having a budget written out makes it much more likely to be successful, and gives a way to evaluate one’s progress,” said Melinda Opperman, president of Credit.org, a consumer credit counseling agency. “For sustainability, we urge people to keep tracking every dollar they spend. They can compare their spending to their proposed written budget and make adjustments, but without tracking and keeping a written budget, there’s no way to know how far off the mark one is getting.”

Creating a budget helps you stay financially on track, or at least know when you're off course.
Creating a budget helps you stay financially on track, or at least know when you're off course.

While tracking is key to identifying areas to improve on, the method you use to track is completely up to you. Choose whatever will make it most likely that you’ll stick to it and create a new habit.

“If you’re tracking spending, you can use a smartphone, a notebook, save receipts in a shoebox, create a spreadsheet, make entries in a pocket calendar, or any other technique that works for you,” Opperman said. “If you’re into tech, get a budget tracking app. If you’re artistic, create a bullet journal.”

One common budgeting mistake is putting undue pressure on yourself to be perfect. If you acknowledge that budgeting is more about building awareness of your spending behavior than it is sticking to the “right” path, you’ll give yourself a greater chance of success and sustainability.

“Budgeting is like playing a match of chess: you set up a game plan. You research your opponent and do all this work to get the best game you can, and as soon as the match starts, you adjust your plan,” said Jesse Mecham, CEO of budgeting software company You Need a Budget. “Budgeting is not about setting your plan in stone. Budgeting is about being dynamic.”

And if even the sound of the word “budget” makes you shudder, shift gears a bit and create a spending plan instead. Both help you build strong habits with your money, but a spending plan reframes the exercise so you think of saving as allocating money you spend on yourself, rather than an austerity measure curtailing your spending outside of a predetermined range.

What’s valuable to you?

Values-based spending is nothing more than making sure that what you’re spending your money on aligns with your values and long-term goals. And the pandemic has stripped away many layers of life as we know it, helping people realize what’s really important to them.

Did you set up a home gym? Start walking more? Turn your kitchen into a 5-star restaurant? While you might not be able to keep up all of your recent lifestyle changes, if you find yourself not missing the weight rack too much, or you’ve become a sandwich-making genius, sticking with even just one of your lifestyle changes will add up over time.

Knowing what you value most helps bring your spending priorities into focus.
Knowing what you value most helps bring your spending priorities into focus.

But if the gym is your happy space, or you can’t wait to get back to your favorite restaurant for lunch with your colleagues, that’s OK, too. “Budgeting is about choices and what’s important to you,” said McClary. “Anything is possible and everything is OK as long as you can meet your basic expenses and set some aside for savings. Don’t focus on the minutiae.”

Budgeting strategies

It’s important to have a plan for your money before it actually hits your bank account. Having a good idea of where you want your money to go decreases the chance of it going somewhere else accidentally, or seemingly disappearing. So it’s helpful to have some tactics and strategies to help prioritize where to put your money.

Pay yourself first

Instead of thinking of saving money as a chore, think of it as preserving it for Future You. Setting up transfers from your checking account to a dedicated savings account that deploy automatically on payday is much more effective than putting aside whatever’s left over at the end of the month (spoiler alert: it’s usually not much). This can be done easily through your bank, and once you set it up, you won’t have to think about it again.

Take advantage of retirement accounts

Many employers offer 401(k) retirement accounts or similar options, which you can take advantage of to invest a portion of your salary into a portfolio to be used when your working days are over.

One big advantage of 401(k) accounts is that the money comes out of your paycheck before it’s taxed, meaning that a portion of what you’re investing would have gone to the government anyway if you hadn’t saved it for retirement (though you’ll need to pay the taxes on that money when you eventually withdraw it after retirement).

Even better, employers will often chip in a percentage of money when you agree to automatically contribute from your salary into your retirement account. The annual limit on 401(k) contributions is $19,500, but if you’re not contributing at least enough to get the full amount your full employer will match, you’re leaving money on the table.

Taking advantage of an employer's matching 401(k) contribution is like getting a bonus on every paycheck.
Taking advantage of an employer's matching 401(k) contribution is like getting a bonus on every paycheck.

If your employer doesn’t offer a 401(k) program, you can start your own Individual Retirement Account through a brokerage like Vanguard or Fidelity. With an IRA, the money will still be taxed, but when you withdraw it after retirement, it won’t be taxed again.

Make your money work harder in a high-yield savings account

Once you’ve saved some money, there are ways to make sure it continues to grow. High-yield savings accounts are typically offered by online institutions that are insured by the FDIC, and feature annual interest rates of around 0.75% to 1%. Though 1% might not seem like a lot, that’s over 10 times the national average of 0.06% for a standard savings account.

Online institutions are able to pay a higher interest rate because they don’t have to pay overhead on things like physical branch locations. Some great options to look into are Marcus, Ally and Synchrony.

Higher risk investments

If you feel comfortable with the basics of budgeting and already have a strong emergency fund to cushion any unforeseen events, you can also consider putting your money to work in an account to buy stocks or other higher-risk investments.

Learning how to invest is a major endeavor in itself, but many basic investments are rooted in the stock market, which can be very volatile. Since the end of World War II, the average rate of return on large stocks is nearly 10%, which is way more than any savings account. But there have been tons of ups and downs along the way, and depending on when you buy and sell, you could end up with much less than the average, or even lose money.

Some people prefer to buy individual stocks, or shares in specific companies. However, buying individual stocks is somewhat like gambling — you could win big, or lose it all. That’s why diversifying portfolios is so critical, and one way to diversify is through an index fund or an Exchange Traded Fund. These funds are made up of a large basket of stocks that generally track a specific market index, such as the Dow Jones Industrial Average or the S&P 500.

Investing in an index fund or ETF can help to diversify your investments across hundreds of companies at the same time.
iStock
Investing in an index fund or ETF can help to diversify your investments across hundreds of companies at the same time.

Investing in an ETF or index fund won’t completely protect you from the ups and downs of the market, but you won’t have to rely on the success of just one company to make money. You can research and buy individual stocks as well as ETFs through apps such as Robinhood, or more traditional brokerage firms like Charles Schwab.

There are also robo-investing platforms, such as Acorns, Ellevest and Betterment, which will invest your money in diversified portfolios based on your financial goals and appetite for risk. These services are convenient and can be a great way to get started if you have little to no investing experience, but make sure to watch out for annual fees.

Tools to help you get there

In addition to having a plan, organization is key. There are lots of budgeting tools and techniques out there to help you spend and save. We’ve highlighted a few here, but remember, what matters most is that you find something that works for you. For some, that might be an automated app that’s linked to all your accounts. For others, it might just be a pen and paper.

You Need a Budget

You Need a Budget is budgeting software that requires the user to manually input spending and saving. While this may seem tedious to some, it encourages intentionality. The company also provides additional support via online workshops focused on personal finance tips.

Mint

Mint is an app available on both mobile and desktop. It’s more hands-off, as you can link your various bank accounts and credit cards, and the app will automatically record activity for your review. Mint also provides free credit scores and can automate reminders for upcoming bills.

Excel or Google Sheets

The ultimate no-frills spreadsheet options — Microsoft Excel, and the similar but free Google Sheets — give you full flexibility to design your budget and decide what to track, in a way that’s customized and relevant to you. If you’re a beginner at Excel, there are also Etsy templates available for download.

Having money issues due to the coronavirus pandemic? Read CNN Underscored’s previous stories in this series:

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed, or may no longer be available.