Boost savings and help reduce your debt in the post COVID-19 era
The Covid-19 pandemic took a massive emotional toll on everyone across the globe. And it cannot be overstated how deeply this virus impacted the global economy and the financial markets. But what about the personal financial toll? While unemployment numbers during COVID reached record highs, today’s workforce has lasting impacts with continued shifted workplace practices and lasting anxiety about future job security. Unemployment in the US is at 4.2% as of March 20251, putting added pressure on those out of work.
So, is there an upside to all this? We think so.
Reduced costs in certain areas of your personal budget may present an opportunity to get ahead. Here are a few smart ideas of what to do with that extra money:
1. Boost your savings
Many Americans who are able to continue working from home are finding that both ‘essential’ and discretionary parts of household budgets have dropped.
This is the perfect opportunity to take that extra cash and boost long-term savings. You can start by building up an emergency fund to guard against the unexpected. Most financial professionals advise putting away anywhere from three to six months of salary. This rule of thumb depends on a range of factors, including whether you work for an employer or for yourself, and other financial obligations. But given that 59 percent of Americans would not be able to cover an emergency expense of $1,0002, building up an emergency fund is a worthy goal. Consider setting aside half of your budget savings from reduced spending. Once you have built up an emergency fund, you can turn your attention to other savings goals.
2. Pay off your ‘bad debt’
The next best thing to saving is reducing high-interest credit card debt. For example, try paying down a credit card with 15 percent interest. It’s one of the first things you should do—especially before you invest money in anything else, even a 401k plan. If you have multiple credit cards, consider debt consolidation programs that put everything into one loan with a single payment and a lower interest rate. You can also look into unsecured loans that give you a (hopefully) lower interest rate and allow you to use the loan proceeds to pay down your credit cards. Each of those are term loans as opposed to revolving lines of credit, which helps your credit score.
3. Invest in your kids’ future
If you have kids, you may already have started saving for their college education. Despite the skyrocketing costs of college tuition, for many it’s still a worthwhile investment3 with college graduates showing substantially higher income and wealth levels than those with only a high school diploma or only partially attending college. And because of those skyrocketing tuition costs there’s no time like the present to start saving. There are a range of tax-advantaged 529 college savings programs in every state, with tax benefits for investing in your home state’s 529 plan.
4. Consider boosting 401k savings
One of the best things you can do is to ‘pay yourself first.’ And with a 401k or similar employer-sponsored retirement plan, many employers offer a matching contribution. So, at a minimum, contribute the amount you need to get the entire match as it’s ‘free money’! It will help get to your goals faster, and it’s an easy/automatic way to save for your retirement—whatever that looks like!
5. Future proof the cost of aging parents
A recent survey revealed that 71% of middle-aged Americans are engaged in caregiving roles for both their children and aging parents. Additionally, 56% of Gen X caregivers financially support either their parents or their children, or both.4 But looking after aging parents can be a full-time job in itself, and it’s helpful to think about what that will look like. You may want to look into long-term care insurance, as it will help you maintain peace of mind that your parents will get the care they deserve—and will reduce the stress of having to be a daily caregiver yourself.
1“Employment Situation Summary,” U.S. Bureau of Labor Statistics, April 2, 2025.
2 “Paycheck-to-paycheck nation: 59% of Americans wouldn’t cover a $1,000 expense with savings,” Fortune, February 6, 2025.
3“Quartiles and Selected Deciles of Usual Weekly Earnings by Educational Attainment,” U.S. Bureau of Labor Statistics, 2024.
4"Gen Xers and millennials aren't ready for the long-term care crisis their boomer parents are facing,” Business Insider, January 11, 2025.
This information is courtesy of New York Life Insurance Company, used with permission. It is intended exclusively for general information only. ©2025, New York Life Insurance Company. All rights reserved.
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