How To Determine Your New ‘Financial Normal’ After the Pandemic

A woman calculates expenses on her calculator.
BartekSzewczyk /

Fantasies about a clean break with the coronavirus have turned out to be wishful thinking as the summer winds down and the crisis continues to smolder. There have been plenty of bright spots, but both the virus and many of its human hosts have proven to be stubborn. A return to normal remains elusive, particularly when it comes to money, but one thing is certain — the changes will keep coming. Here’s what to expect from the new concept of financial normalcy as the world continues to dig out.

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As With the Old, the New Normal Will Be Different for Everyone

Same as before, the definition of “normal” will depend on who you ask.

“Some have had an economic awakening, while others are taking loans for vacations as a reward for making it through the shutdown,” said personal finance expert Joe Minnitte of Proof Principles Matter. “For many people, this is the first time they have started to think about external forces making it difficult to support their families, businesses, etc.”

Your spending habits are sure to have changed again and again as the situation evolved over the last year. If your financial plan didn’t change with it, take a moment to check back in.

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“Consider doing a self-audit on your expenses as the economy recovers,” said CPA and financial coach Laura Lonie. “Ask yourself if each discretionary expense is worth the price you are paying. Does this expense bring you joy?”

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All those streaming networks, games, wellness apps and other services that you subscribed to during the pandemic, for example — what was normal then might be financial dead weight now.

“Now is a good time to review your bills to see if you are paying for services you do not use,” Lonie said. “Cancel any services and subscriptions you no longer use.”

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Plan for Long Waits, Higher Prices and Living With Worn-Out Durable Goods

Things that cost a lot and are meant to last a long time — durable goods — are where regular people continue to feel the tug of short supply and inflated costs the most.

“The prices of vehicles and homes have surged and many other items such as appliances have long wait times,” said Lonie, who recently had a hard time replacing her own dryer. “Sales on many items have disappeared or are almost nonexistent in some areas due to COVID-related shortages.”

Lonie advises waiting to buy durable goods and even to put off travel until the new normal goes back to something like the old normal — the one you could afford.

“If you can hold off on taking that big vacation right now, you may save a lot of money,” she said. “The exception would be if you have points to use for travel or purchases, you may want to use them now as there are published reports that many reward programs will be devalued in the next few months.”

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Expect To See Rising Prices Disguised as Smaller Packages

Inflation has become an accepted part of the post-pandemic reality. Since no one wants to see their favorite products get more expensive, crafty companies are keeping the same price tag as a decoy and simply slapping it on a smaller package.

“As the economy recovers from the pandemic, you will notice that ‘shrinkflation’ will be on the rise,” said Sandy Yong, speaker, investor and author of “The Money Master.” “This is when manufacturers of consumer staples and food products shrink the product sizes in order to keep the prices the same. Some of your favorite grocery store items such as ice cream and cereal boxes will come in smaller packages. This is due to the rising cost of fuel, raw goods and supply chain backlogs that occurred during COVID-19. Consumers are price-sensitive and tend to notice price increases rather than downsized packaging. Therefore, this is a sneaky way that manufacturers can remain competitive.”

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After a Crisis, Normal Means Saving More, Spending Less

Despite all the pent-up demand, the trend toward more saving and less spending that dominated the pandemic is likely to linger.

“If there were ever a reason why people required a rainy day fund, this pandemic and the subsequent stop-the-world moment proved it,” said Jacob Villa, co-founder and marketing director of School Authority.

Stop-the-world moments, after all, have a way of making people want to avoid being caught unprepared ever again. If history is a guide, they’ll fill that need by saving money.

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“This would be consistent with previous economic downturns since the aggregate savings rate climbed by 2% per year during the financial crisis of 2008-09,” Villa said. “If savings rates rise as a result of the new normal, consumption will be cut by $500 billion by the end of 2021.”

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Increased Savings Seem to Be Coming at the Expense of Entertainment

Spending on dining and bars is down, according to Brian Walsh, senior manager and CFP at SoFi. While some of that can be attributed to continued virus apprehension, staff shortages and restrictions where they still exist, a lot of this new normal is just leftover lockdown habits that won’t go away — and that could be a good thing.

“Although we love to support local restaurants, people have been seeing savings by cooking more at home,” Walsh said. “As restrictions begin to lift, budgeters will have to think twice on excessive eating out in the future as people start traveling and eating in-person again.”

Another lingering residual effect is that entertainment budgets remain lower.

“Instead of spending on aquariums or museums on the weekends with the kids, parents have been saving significantly on activities such as socially distanced hikes,” Walsh said. “This won’t last forever, but it is a reminder that entertainment does not always have to come with a price tag.”

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Last updated: Aug. 2, 2021


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