Millions of Americans have lost their jobs due to COVID-19, while many others have seen their hours -- and income -- cut. Meanwhile, countless small businesses have been forced to close their doors, and with limited relief to be had, some are at risk of never managing to reopen.
It's for this reason that Americans as a whole are being urged to spend their money cautiously in the coming weeks -- to avoid needless spending and instead work on boosting their emergency savings so that if the situation worsens, they have a means of covering the bills.
But what if you're not doing poorly, financially speaking, during the ongoing crisis? What if your income has held steady, and you're actually saving money since you're not spending money as much on commuting, dining out, or entertainment outside the home?
If you're in that enviable position, you may be contemplating the idea of home renovations. After all, what better time to tackle those projects than a period when you're already stuck in the house with nowhere to go?
Spending money on renovations when you're in a good spot financially isn't a terrible decision to make. But before you go that route, ask yourself some key questions:
1. What does my emergency fund look like?
As a general rule, it's wise to have three to six months' worth of living expenses socked away in the bank. That gives you a cushion for when unplanned bills pop up or for periods of unemployment. But given the extreme nature of the COVID-19 crisis, you should really be aiming for six months' worth of essential expenses in savings -- at a minimum. If you're not there yet, take your extra cash and put it in your bank account rather than use it to renovate your living space.
2. Do I have repairs I need to tackle first?
Generally speaking, it's more fun to spend money improving your home than fixing it. After all, wouldn't you rather enjoy a new patio or awning for your deck than pump the same amount of cash into addressing problems with your heating system? But while home repairs may not be exciting, they're quite necessary, and in some cases, the longer you put them off, the worse -- and more expensive -- the problem at hand can become. As such, think about whether your home needs work before spending money enhancing it.
3. Can I pull off this renovation safely?
Maybe you're good on emergency savings and don't have any pressing home repairs to tackle. If so, there's nothing holding you back financially from making improvements to your property. But before you do, think about what that will entail. If it's work you can do yourself, you won't risk exposure to contractors who come in and out of your home. But if the job at hand requires the help of outside professionals, you may want to hold off until it's safer to have strangers roaming around in your living space.
At a time when so many people are scrambling to pay the bills, having extra money on hand is something to be thankful for. There's nothing wrong with using that cash to make your home a nicer place to live. Just be sure you're really in the right position to move forward on renovations before diving in.