COVID-19 altered how people lived and worked significantly. As a result, financial hardships became fairly commonplace in households of all kinds, including for newlyweds. If you are wondering what couples are going through and how they can move forward, here’s what you need to know about the impact of the pandemic and the five big financial challenges facing newlyweds after COVID-19.
Did COVID-19 Affect All Newlyweds the Same Financially?
In many cases, COVID-19 led to financial burdens for couples. Whether it was diminishing income, higher costs for critical household items, or the need to take on debt to make ends meet, many households had to stretch to handle their needs.
However, it is important to note that not all newlywed couples face the same financial challenges as others. Every household’s situation is unique, causing some to experience struggles that others don’t. For example, while unemployment impacted millions of families, many others didn’t experience any significant change to their work situation, leaving their source of income steady.
Ultimately, the degree of impact does vary. Some newlyweds will recover financially quickly after COVID-19, while others will need substantially more time or might have to take dramatic steps to right their financial ship once more. But that doesn’t mean any newlyweds should fear the future. With some strategic planning, it is possible to get back on track.
5 Big Financial Challenges Facing Newlyweds After COVID-19
1. Misaligned Budgets
One of the biggest challenges newlyweds are facing is misaligned budgets. Their pre-COVID-19 budget may not have been ideal during the heat of the pandemic, making shifts a must. However, as time passes and the situation surrounding the pandemic changes, even those changes may need reevaluating.
Ideally, newlyweds need to take budgeting to the next level. By reviewing their allocations on a monthly or bimonthly basis, they can identify potential issues before they arise. That way, they can strategically alter their targets in advance or better prepare for fixed expenses, ensuring that they can stay on top of payments.
2. Reevaluating Goals
Due to the pandemic, many newlyweds had to put some financial goals on hold. Saving for a home, maxing out retirement contributions, setting money aside for a child’s college fund, and similar moves may not have been practical during COVID-19. Many households experienced income reductions, requiring them to move away from saving to ensure they could make ends meet.
As the pandemic calms, newlyweds need to reevaluate their financial goals. While they may decide to remain committed to the same targets, they might need to adjust their timeline to make achieving them manageable. That way, there isn’t an undue financial strain associated with hitting those marks.
3. Savings Recovery
For many couples, dipping into emergency funds and other long-term savings wasn’t optional during the pandemic; it was a must. With job losses and income reductions, tapping savings to cover expenses was a necessity for many. As a result, their savings accounts are now diminished, if not empty.
In the wake of COVID-19, recommitting to saving is essential. Newlyweds should work to rebuild their savings account balances, particularly their emergency funds. With renewed savings accounts, newlyweds have a financial cushion to help them navigate the unexpected, and that could be critical during the broader recovery period.
Newlyweds should try signing up to these apps to help them save.
| App | Fees and Minimum | Best for: |
|---|---|---|
| Digit | 30-day free trial period. $5 per month | Setting aside automatically. |
| Acorns | $1 per month | Spare change saving. |
| Qapital | $3 membership | Letting you set rules to automate savings. |
4. Higher Debt
Another option many couples took for making ends meet was debt. Whether that involved opening new credit accounts, tapping home equity lines of credit, maxing out credit cards, or any other step, many newlyweds now have larger financial obligations than they did before the pandemic.
Ideally, once an emergency fund is in place, couples need to work diligently to pay down high-interest debt. High interest rates can create significant hardship and cost a lot more over the long-term than their lower interest rate counterparts. By directing extra money to high-interest rates debts, it’s possible to tackle them faster, loosening up your monthly budget while saving money over the long-term.
5. Reduced Retirement
In some cases, newlyweds reduced contributions or stopped contributing to retirement accounts to ensure they had enough money to handle living expenses. As a result, their balance may have stagnated or, depending on the asset allocation, may have even fallen.
Newlyweds should spend some time reviewing their portfolios, ensuring they are properly balanced based on their goals and risk tolerance. Then start contributing again as quickly as possible.
Even small contributions can add up. So, couples shouldn’t shy away from saving for retirement simply because they can’t commit the same amount they did pre-pandemic.
Can you think of any other major financial challenges facing newlyweds after COVID? Share your thoughts in the comments below.
Read More:
- Straightforward Ways to Manage Your Finances and Wealth During the Coronavirus Crisis
- Refinancing Auto Loans During the Coronavirus
- Managing a Healthy Recovery for Your Credit
