We used to save a lot more for retirement every month, but the COVID-19 pandemic has given us a new savings priority

• Before the pandemic, my husband and I deposited any cash left in our checking account at the end of the month into our IRAs.
• Now, though, with so much economic uncertainty, we're directing that cash into our emergency as well, instead of just our retirement accounts.
• We have never worried before about having enough cash on hand for an emergency, but since we might not have a vaccine until next spring, we want to be prepared with a year of expenses saved.

We look forward to a time when we can say "before, during, and after the pandemic." Our financial planning has a before and during, but we haven't made it to the "after" phase yet. 

Before COVID-19 took the world stage and became a global problem for both our health and our economies, my husband and I were more carefree with our spending. Although we rarely spent all the money we brought in during the month, we did go to restaurants regularly, spent three-day weekends at a nearby resort, and bought items that were not deemed essential, like books and video games.

We would transfer the money we had left at the end of the month to our retirement accounts, usually our IRAs. We placed the money in the IRAs, hoping to reach the maximum allowed contribution to deduct from our taxes at the end of the year. 

Our savings priorities have changed

Now that we have spent over 200 days going out only for essential errands and occasional walks outside, our spending has changed, and so has our outlook. Some scientists say that a vaccine won't be available until next spring, so we'll have to hunker down in this new reality for longer than we imagined.

We haven't sold all of our stocks or thrown money into the market. We have avoided any panic and haven't done anything extreme. However, we live with more uncertainty, and that uncertainty is apparent in what we do with our disposable income and the money left over at the end of the month.

After we pay the bills, the groceries are covered, and we have paid for prescriptions, copays, etc., we now deposit what we have left in our checking account to our emergency fund instead of just directing it to our IRA. The pandemic has lasted over six months and has created a new level of concern for us about our emergency funds. This current crisis has lasted much longer than we anticipated and could impact our finances more negatively than we previously imagined possible.

Why we want a larger emergency fund

In the before days, we thought we had plenty of cash put aside for an unforeseen illness, home repair, car repair, or short-term job loss, but as the months wear on, that level of assurance and comfort has eroded. We never imagined the current scenario (a global pandemic) or realized that an emergency might not be something we had some foresight to plan around. 

Even if a vaccine arrives before spring, the hospitality, retail, tourism, and other industries suffering from partial closings might take longer to recover and impact ours and other people's bottom lines. However, we are hoping this isn't the case. I think we all hope the recovery will be swift and robust.  

We once felt confident that we were as responsible as possible in planning for our retirement and unexpected expenses. But now we are prioritizing our emergency fund alongside our retirement funds. We want to build up at least a year of costs, which will take us a significant amount of time because it requires doubling what we currently have put aside. 

So, although we haven't done anything rash or too emotional, we have changed our strategy to help build back up some of the confidence and more carefree attitude we once had toward our discretionary spending. We are looking forward to the "after" time, and we hope to go back to feeling confident about our financial choices, especially the ability to take off for a three-day weekend and not have it derail our monthly budget.