Why young people can use this uneventful summer to develop good financ

The summer of 2020 will go down in history. Financial advisers have long encouraged young people to skip happy hours, coffee dates, and other frivolous outings in order to build up savings. Now, continued social distancing guidelines have enforced this frugality on almost everyone at a time when spending usually reaches its peak .

The pandemic is polarizing Americans’ finances, especially for millennials and Gen Z. Some of us are at surplus savings under stay-at-home orders, while others are just focused on survival. I see this polarization firsthand while advising young people at Albert , a personal finance app whose customers (which skew 20-something) can text me and the other Geniuses for financial advice.

Almost every week since March, I’ve gotten a frantic text from a young person who recently became unemployed, can’t afford rent or childcare, or is considering taking out a risky loan or picking up a side gig just to stay afloat. Although I enjoy helping them find creative solutions to their personal finance concerns, it’s incredibly disheartening to see so many young people struggling.

I’m also hearing from young people who haven’t been impacted by the mass layoffs and say they’re saving more money than ever before. In fact, Albert data shows that users under the age of 40 have tripled their savings rate since the pandemic began. If you’re part of this group of still-employed millennial and Gen Z savers, you’ve likely noticed the silver lining of summer shutdowns in your bank account–and careful planning can turn this moment into safety nets, nest eggs, and more. How can you make the most out of your pandemic savings?

Here are some “adulting” money mindsets to adopt right now.

Adjust your plan

It’s hard to navigate the ever-evolving nature of the pandemic. The virus has made many of us hypervigilant in protecting our physical health, but it’s important to prioritize our financial health (which often also contributes to our mental health) as well. Take a quick audit of where you are financially.

To start, ask yourself a few critical questions. Have any of my financial goals changed because of the pandemic? What’s my top financial priority at the moment? Are there any opportunities that I can take advantage of to make the most out of my given situation? Once you’ve reflected on these questions, either with other people in your household or own your own, you’ll already have the bedrock of a pandemic financial plan to help you reach your goals.

Plan your finances ahead of time

If you’re like most people, you’re worried about becoming unemployed. Even if your position seems stable, the stress of seeing friends and family experience layoffs can make unemployment seem like a looming inevitability.

No matter what your situation, I recommend saving a bare minimum of three months’ worth of bills and living expenses. If you can save six months’ worth, even better. You’ll want to prepare yourself in the event of an unexpected job transition, unplanned large expenses, or a significant decrease in your current income.

Tackle toxic debt

I tell my advisees all the time that not all debt is the same; in fact, certain debt is toxic. If you haven’t already, it’s important to figure out which of your debt sources are sapping you, such as high-interest credit card debt, payday loans, and high-interest loans; and which are actually good debt, such as mortgage and student loans.

If your savings are bigger than ever but you’re still struggling with harmful debt, you should focus on tackling it as soon as possible, especially if you have room in your budget to get it done. You’ll emerge from the pandemic with a much higher credit score than you had in March.

Clarify your goals

Should your surplus savings go toward buying a new car, paying for your post-COVID wedding, or putting a down payment on your first house? If, like a lot of young Americans, you’re saving for all of these goals and more, how do you prioritize? An exercise that has helped a lot of the young people I work with is thinking about why each of your goals is important in one sentence or less. Once you have some clarity, focus on your top three goals and put the majority of your savings toward the one that’s most urgent.

Start investing

Millennials are nearly six times as likely as baby boomers to invest in the stock market during the pandemic, possibly in an effort to take advantage of the current market’s volatility. If you’re still a beginner when it comes to investing and have saved a lot of cash under the stay-at-home orders, now is the perfect time to start. I do recommend steering clear of day-trading apps, though. They might be popular among our age group, but the nature of these platforms encourages us to make impulsive decisions and risky bets . While it’s easy to get pulled into the game of chasing hot stocks, research has shown that buying and holding a diversified group of investments can generate a positive return over the long term. Automated investing services–otherwise known as robo-advisers–do this for you, making them perfect for beginners. Research the one that’s best for you and start maximizing your savings.

At the end of the day, many of us who have forgone nonessential outings since March are experiencing a strange mix of emotions right now: pride that we’re doing our part for Americans’ health mixed with relief that our bank accounts are finally growing, as well as some residual longing for the summer that wasn’t. Try seeing that silver lining and turning this time into a foundation for your financial future.

Mark Reyes is a certified financial planner, a financial advice expert at Albert, a financial services company, and an advocate for financial literacy–with eight years of experience in the finance industry. When he’s not volunteering to teach financial wellness among the Los Angeles communities, you can find him working on his car with his rescue dog.

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