The coronavirus pandemic has had an undeniable impact on the economy. Unemployment is up in the U.S., and the overall economy is officially in a recession.
However, a new study by the University of Chicago reports satisfaction with finances is at an all-time high (80%), even as overall happiness levels reach a new all-time low (14%).
"The contrasting results suggest people might be comparing their happiness now to how they felt before the pandemic," said Justin Halverson, financial advisor from Great Waters Financial. "They might also be comparing their finances to those who lost their jobs or lost money in the stock market over the past few months."
For those who aren't as optimistic about their finances, Halverson offers a few suggestions for improving your financial situation:
Deal with Debt
"When it comes to feeling optimistic about our money, keeping debt low can help you feel more confident," Halverson said.
Recent figures show many Americans are working to pay down their high-interest debt right now.
"For the first time in three years, revolving debt, which is mostly made up of credit card debt, dropped below $1 trillion," Halverson said. "You can tackle your debt by using the snowball method: Start by organizing your debts to determine your lowest balance. Make the minimum payment on your other debts and use any extra money to pay off your smallest debt. Then pay off your next smallest debt. Like a snowball rolling down a hill, you will build momentum to tackle your debts until they are paid in full."
Revamp Your Budget
For many Americans, spending habits have changed during the pandemic, sometimes alongside changes in monthly income.
Halverson says, as a result, now is a good time to revamp your budget.
"Take a look at how much money you’ve been spending over the past several months. Compare that to your income. You can use an app, online software or a simple pen and paper to write down your new budget," Halverson said.
Halverson offers a budget worksheet on the Great Waters Financial website.
Save for the Future
For those who've been able to maintain their job and a regular income, Halverson suggests saving more for the future.
"You’re likely spending less right now, so take that money you would be spending on dining out or going to the movies each month and boost your retirement contributions," Halverson said. "Ideally, you should be contributing 10-15% of your income to your 401(k) or other retirement savings. A financial professional can help you create a plan for saving and investing."