Staying home during COVID freed up hundreds of dollars a month that I'm spending in 3 ways to build wealth

  • Staying home during COVID erased whole categories from my budget, like travel and clothes.
  • I had an extra $300 to $500 a month available, so I decided to use it to build wealth.
  • I’m building up my emergency fund and retirement account, and investing more every month.
  • Get a second opinion on your retirement plan from an advisor. Set up a free virtual consultation today »

A couple of months into the pandemic I realized that my budget no longer made sense. I had categories on there that quickly became extinct. The cash I had allocated for brunch with friends, weekend excursions, local activities, and even for new clothes had gone completely unused because those were things that I couldn’t do at the moment (especially while we were in a full shutdown in New York City). 

I started to see that I had around $300 to $500  a month that I had previously carefully budgeted for, that was sitting idly in my savings account. I figured, rather than just leave it there or add it to other categories of my budget, I’d use it strategically to benefit my overall financial portfolio and future planning. 

Here’s what I did with the extra monthly cash from my budget that went unused in 2020. 

1. Filled up my emergency fund

It had been a year or two since I did anything with my emergency fund. After getting laid off from my full-time job in 2016 and becoming a full-time entrepreneur and freelancer, I spent time regularly adding to my emergency fund, since working for myself meant more financial risk. After I had enough money in that fund to last me six months, I decided not to add a penny more. 

But when the pandemic hit and I had to tap into that fund a little bit to cover bigger bills (such as rent and a few health bills), I decided to use some of my unused budget cash to get that fund back up to the amount I’d had in it pre-pandemic. Every month, I added $50 to $75 to my emergency fund and by the end of the year, I had replaced all the cash I took out. 

To keep my emergency fund growing (since I feel I’m even more at risk of needing it as an entrepreneur and freelancer in 2021 with the ongoing changes caused by the pandemic), I’ve committed to contributing 25% of any unused cash from my 2021 budget to this fund. 

2. Contributed more to my retirement account 

Contributing to my SEP IRA retirement fund has been a slow process for me. I only started this retirement fund a few years ago, but it’s something I’ve wanted to make a priority. At the moment, I contribute a set amount every month.

I have a lot of work to do to get my retirement fund where it needs to be, so I decided to add an extra $100 to $125 a month from my unused budget cash. This gave my account a significant boost by the end of 2020.

3. Added more money to my investments 

Putting more money into my taxable investment accounts hasn’t been a priority or even something I did consistently. But in an effort to build long-term wealth in those accounts, I decided to set a monthly goal of depositing between $100 and $125. I’d like to be able to rely on the growth of my investments down the road, so I feel good about contributing more regularly now.

By taking leftover cash that I would have spent on fun activities or travel in 2020 and using it to fuel my financial goals, I’ve improved my money strategy and even gotten a clearer picture of the changes I need to make to keep up with my goals. It also showed me that even when I start spending money again on “fun things,” I need to carefully re-do my budget to make contributing to my emergency fund, retirement fund, and investment accounts more of a priority.

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