COVID-19 controlled nearly every part of our lives for over a year. Job security shrank, the market became unstable, and quarantines impacted every industry. Even with vaccines rolling out and states reopening, we likely haven’t seen all the long-term effects of the pandemic. 

While life is returning to some semblance of normal, personal finance looks different than before the pandemic. Individuals are rethinking their financial priorities, spending less on nonessentials, and saving more. Many people are rethinking their risk tolerance and changing their investment strategies. 

Here at Guiding Wealth, we’re dedicated to developing customized financial strategies that fit each client’s unique circumstances. If the pandemic impacted your finances, we are ready to help you alter your investment strategy to match your new risk tolerance. 

Risk Tolerance After the Pandemic

The pandemic caused many people to experience financial emergencies. Job loss reduced income, which forced individuals to dip into their savings or go into debt. Disrupted supply chains caused the prices of many staples to drastically increase. Wild instability in the stock market harmed investments and reduced the value of retirement savings.

As such, people of all ages are rethinking their financial plans and goals. In many cases, that means realizing that they are no longer comfortable with the same level of risk as before the pandemic. Most people are moving toward a safer strategy with fewer risks.

New Approaches to Saving

In general, risk tolerance changes over time. People usually opt for high-risk/high-reward financial strategies when they are young and move toward less risk as they age.

Younger people generally save less than their older counterparts. However, the pandemic has caused everyone to see the value of saving.

People are trying to build up larger emergency funds post-COVID. Before the pandemic, most financial experts recommend saving up about three to six months of living expenses. Now, millennials (who are still recovering financially from the 2008 recession) are trying to save up 9 to 12 months of expenses.

Changes for Small Business Owners

COVID had a devastating impact on small business owners in many industries. Even with government assistance, such as the CARES Act, many small businesses lost clients and had to lay off workers. Some closed permanently. 

According to one study from March 28 to April 4, 2020, 43% of small businesses had temporarily closed due to reduced demand, supply chain disruptions, and/or employee health concerns. The same study showed that most small businesses struggled with the pandemic due to a lack of liquid assets. 

Of the businesses studied, many had only enough cash to operate for two weeks. Over 75% of businesses didn’t have cash for more than two months of expenses. The businesses that believed they would still be open by the end of 2020 were those with more cash on hand.

While the CARES Act was designed to help small businesses stay afloat during the pandemic, it wasn’t always enough. Some businesses didn’t have enough cash to survive until government assistance programs kicked in. Others simply closed due to changes in the economy, problems finding employees, or personal issues. 

Based on data from the first few months of 2021, small businesses are recovering, but there are still significantly fewer people self-employed now compared to 2019. Going forward, small business owners will likely try to reduce their financial risk by keeping more cash on hand and avoiding debt when possible.

Risk Tolerance and Investment Strategies

COVID has significantly affected investment strategies. For example, many people have pushed out their retirement plans. Baby boomers are now planning to retire closer to age 69 than 65. Before the pandemic, many Americans stated that a lack of savings was their main retirement roadblock. Now, more people believe that the economy is the largest threat to their retirement plans. 

Updating Your Post-Pandemic Financial Plan

Whether you are already retired or planning for the future, chances are that COVID has changed your financial perspective. If you feel like you need to reduce your risk tolerance going forward, here are some areas to consider.


More and more people are losing their jobs — and leaving their jobs — after the pandemic. Consider your career and what changes the pandemic may have brought about. Do you want to change jobs to one that may allow more work-from-home benefits, or do you want to change careers entirely? This is an important factor in any long-term plan.


According to one survey, nearly two-thirds of Americans said that their spending habits changed due to COVID. People are spending more on investments, groceries, and pets and less on entertainment, travel, and luxuries. If you want to change your spending habits to divert more money toward college savings accounts, retirement savings, or charitable giving, update your budget to reflect your new priorities.


Increasing your savings isn’t just about not buying things. The majority of people defined themselves as “frugal” before the pandemic but still had to make significant lifestyle changes during COVID. For example, an April 2021 survey indicated that over 75% of baby boomers had decided to take the money they would have spent on entertainment, dining, or travel and save it instead.

If you want to save more money, there are several things you can do. Reduce expenses by cutting subscription services or switching to free options instead of paid premium versions. You can also use coupons and discounts to lower costs. Automate your savings by setting up a regular transfer from your checking account to your savings account.


If the pandemic impacted your investment portfolio, retirement savings, or risk tolerance, now is a good time to reassess your plan. Diversify your portfolio to balance high-risk/high-reward investments with stable choices for long-term growth. A financial expert can help you figure out a workable plan based on your goals.

Evaluate Your Risk Tolerance With a Financial Expert

The Great Depression impacted an entire generation, as did the recession of 2008. People of all ages still haven’t recovered fully from that recession, and the pandemic caused even more financial uncertainty.

If you’ve realized that you aren’t comfortable with your pre-pandemic risk tolerance, now is the time to make changes. At Guiding Wealth, we focus on creating a personalized financial plan for every client. We’ll discuss investment opportunities and savings options based on your risk tolerance and financial goals. To schedule a consultation, contact our team.