10 items in your budget that you should revisit after an economic downturn

During pandemic lockdowns, many people drastically changed how they save and spend money. Those that lost jobs or income may have put a pause on retirement contributions, many people with student loans took advantage of the option to temporarily stop making payments, and almost everyone cut back on discretionary spending with more time spent at home. But now that we’ve entered an economic recovery phase, it’s probably time to readjust your budget.

“In general, it’s crucial to revisit your budget every month or at least a few times per year,” said Barbara Friedberg, investing expert and owner of Barbara Friedberg Personal Finance. “With the economy rebounding, it is an ideal time to ramp up saving and investing.”

Student Loan Payments

President Joe Biden recently announced an extension of the pause on student loan repayment, interest and collections until Jan. 31, 2022. But you may want to evaluate if you still need to be taking advantage of this pause.

“If you cut back on loan payments earlier in the pandemic and are in a more stable financial position, now may be the time to revisit your budget and add those expenses back in,” said Nicole Dow, senior writer at The Penny Hoarder. “Just make sure you have an adequate emergency fund built up first.”


“There may be temporary changes you made during the pandemic that are now permanent,” Dow said. “Maybe you’ve decided to stick with getting your groceries delivered, and you need to account for service fees and tipping.”

In this case, make sure to increase what you’ve budgeted for groceries compared to pre-pandemic, which may mean cutting back elsewhere.

Commuting Costs

“Perhaps your employer has chosen to stay remote for good, and you can cut out commuting costs,” Dow said.

Take the money you used to budget for gas or public transportation and funnel it into savings if possible.

On the other hand, you might actually be spending more on gas and auto payments than before, which means you’ll have to account for the extra costs in your budget.

“As of Aug. 10, the national average gas price was $3.19; on April 27, 2020, it was $1.77, which means gas costs almost $1.50 more per gallon today than it did pre-pandemic,” said Ted Jenkin, CEO and co-founder of oXYGen Financial. “That means an average household could be spending an additional $50 a month on gas than it did pre-pandemic. In addition, you may have a higher monthly cost for the use of your automobile if you bought a new or used car during the spike in overall automobile prices. Your overall automobile and transportation expenses could be up more than $100 a month.”

Your Emergency Fund

“If you’ve been affected by the economic downturn, chances are you’ve had to dip into your emergency fund — or maybe you’ve spent it completely,” said Donna Freedman, longtime personal finance journalist and the author of the “Your Playbook for Tough Times” series. “The COVID-19 pandemic is a great example of why you need an emergency fund — so as soon as humanly possible, make it your business to start building it back up.”

That means adding a line in your monthly budget for savings. To make this a doable goal, consider setting aside a little bit every day.

“For example, suppose you said, ‘In the next six months I will save $500.’ That’s about $2.78 a day,” Freedman said. “If you packed your lunch even once a week, that’s likely to be three or four times (or more) what you would spend if you went out for lunch. So do that, and then look for other ways to set aside the other $2.78 a day.”

Having an emergency fund is especially essential if you are planning on making any major life changes post-pandemic, such as a relocation or scaling back on work.

“Perhaps [the COVID-19 pandemic] has changed your thoughts about where you’d like to live, or your feelings about work/life balance,” said Shari Greco Reiches, wealth manager, behavioral finance expert and author of “Maximize Your Return on Life: Invest Your Time and Money in What You Value Most.” “If you are contemplating major changes, you may need to increase your savings, particularly making sure that you have a ‘rainy day’ fund to fall back on if needed.”

Prioritize your emergency fund over other budget items, said the founder of Lazy Man and Money.

“If you have federal student loans, you may want to put that money into your emergency fund and save until you need to send it in,” he said.

Discretionary Spending

“Families have had to cut back and sacrifice over the recent economic downturn. Now that the economy is improving for many families, discretionary spending can begin to be added back to the budget,” said Dave Leto of 50plusfinance. “[This includes spending on] fun activities we can do again, like going to the movies or attending carnivals or even a trip to Disney World. Attending baseball, football and basketball games — all pricey pursuits — can now be added to the budget again. It’s time again for some family fun.”

But make sure this spending doesn’t blow your budget.

“Understand that unless your income has seen a boost post-pandemic, you will probably need to cut back in other areas of your budget to make room for these additional expenses,” said career and finance expert Mandi Woodruff. “The key to ramping back up your spending in these kinds of fun or entertainment categories is to do it thoughtfully and resist the temptation to say ‘yes’ to every opportunity to have a good time. Focus on the key activities that bring you the most joy.”

This means also taking note of which discretionary expenses you can permanently cut out of your budget.

“If you’ve paused services you’ve learned to live without, you may want to continue to keep them out of your budget,” said Julie Rains, writer at Investing to Thrive. “This way, you can divert funds to an emergency cash account, loan payoffs or investments. But don’t feel guilty about spending again. You may want to support local businesses, like farmers and restaurants, and contribute to a sustained economic recovery.”

Clothing and Grooming

“With all the work at home options today, slashing clothing and grooming expenses should be a breeze,” said Friedberg, who is also the owner of Robo-Advisor Pros.


If you took a break from investing after the initial market downturns, it’s time to get back into it.

“Be sure to dollar cost average, ie. consistently put money into your investments — every paycheck, every month, every year — until retirement,” said Derek Sall, founder of Life And My Finances. “Sure, the market is up, but it will likely continue to go up for years (that’s what history tells us anyway), so don’t miss out on the 200% rise to catch the 10% fall. That just doesn’t make any sense.”

You should also start investing in other areas of your life again as well, said Sam of FinancialSamurai.com.

“Any budget cuts related to investing for your future need to be reinstated,” he said. “That includes investing in things that will make you more marketable to future employers who are as hungry as ever to hire great people. Examples include spending money on continuing education, a new outfit and your mental health. After such a difficult time period, we need to reinvest in ourselves to face the new challenges ahead.”

Remember that investing now will help you in the long run.

“In terms of budget realignment, after necessary expenses, the more you can save from your current income, the more you can invest for future income and a higher standard of living,” said Stanley J. Kon, co-founder of Ripsaw.

Paying Down Debts

Perhaps you couldn’t afford to be aggressive about paying down your debts during the time of the economic downturn, but if you’ve since gained employment or income, it’s time to prioritize this again.

“Reduce unnecessary expenses and get out of debt for real this time,” Sall said. “That debt is weighing you down. Do your best to plow your way out of it so you can actually start winning.”

Focus on credit card debt, which tends to have a high interest rate.

“Chances are that many people put a lot of expenses on their credit cards over the last year, maybe more so than they normally would. If that was the case, start paying off those credit cards,” said John Rampton, founder of Due.

“High-interest debts, especially credit cards, can really choke a family’s cash flow and if hard times hit, it’s also another source of stress,” added Elle Martinez, podcaster and founder of Couple Money.

Retirement Savings

“Households that had to lower or pause contributions to their retirement accounts should try to make up for the lost time by increasing their savings,” said Andrew Latham, managing editor at SuperMoney, a financial services comparison site. “Even the most financially savvy among [us] will struggle at times to save when we want to splurge. Help yourself out by setting automatic contributions to your retirement account from your paycheck before the money has a chance to hit your checking account. This gentle nudge is often all people need to stay on target with their retirement goals.”

However, keep in mind that other budget items are more essential, so only contribute to retirement if you can afford to.

“Make sure you’re debt-free with a fully-funded emergency fund in place before you restart,” said George Kamel, a personal finance expert with Ramsey Solutions.

Other Savings Plans

In addition to your retirement plan, you may also want to resume contributions to other savings plans.

“Now that we’re seeing a recovery take hold, we’re encouraging investors to use the moment to restart contributions to their retirement savings plans, whether 401(k) [plans] or Roth IRAs, as well as restart contributions towards other investment and savings plans, like 529 college plans, which can also provide investors with tax advantages,” said Leslie Geller, wealth strategist at Capital Group.

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