Money Management in the Time of COVID
The COVID-19 pandemic has resulted in financial stress for many individuals. Whether it's reduced work hours, job loss, increased child care costs, or concerns over healthcare-related expenses, this era requires careful financial planning to navigate. Here are several ideas for how you can manage your money during the pandemic.
Managing Your Money
If your income has been reduced because of COVID, the first step is to take stock of your existing income, the cash you have on hand, and any expenses you need to plan for, like regular bills and revolving credit debt. Writing out a budget can help you identify where you can cut back and reduce expenses while making the most of your cash flow. According to the U.S. Department of Labor, you may be eligible for unemployment insurance, including Pandemic Unemployment Assistance, if you lost income as an independent contractor or gig worker. Visit your state government website to learn more about eligibility requirements and application processes.
Seek Bill Relief
Many mortgage lenders, credit card companies, and auto financers are temporarily suspending or reducing payments for people whose finances are negatively impacted by COVID. Get in touch with creditors before you find yourself behind on payments to try and work out a solution. Make sure that you get all terms in writing to ensure you know exactly what you're getting into — when your bills will resume again and how you’re expected to repay deferred payments. The Cares Act offers a number of protections for consumers, landlords, and business owners. Knowing what you’re entitled to ask for can aid the process.
Cut Your Costs
Once you’ve determined relief options you’re eligible for, it’s time to cut back on non-essential expenditures. For example, eat at home rather than dining out, reduce or eliminate streaming packages or cable bills, and hold off on buying non-essential, big-ticket items. For seniors, some ways to relieve financial stress include re-assessing healthcare coverage and looking for ways to cut transportation costs. Shopping at thrift stores and taking advantage of senior discounts are other ways to help save money. Make the best financial decisions you can for you and your family at this time, in preparation for an improved future economy.
The pandemic has created new types of stress for everyone, and even though it's important to keep an eye on your family finances and cut costs where prudent, self-care is also an essential need, according to Prevention magazine. Some things will simply help improve your physical and mental outlook and should be considered a necessity. For example, purchases like vitamins and supplements, skincare products, and even occasional small luxuries like your favorite coffee can help improve your quality of life and your mental outlook and are, therefore, important to maintain. Look for coupons and other special online deals and promos that can help you save a little money.
Maintain Your Investments
If it is within your control and you are still employed, continue to contribute to your 401(k) or retirement plan, as well as maintain your investing strategy with the advice of your financial advisor or money manager. It can be tempting to back away from investments right now or even to draw down money, but those should be your last resort. Keeping your finances as close to “normal” as possible will help ensure you’re in good financial standing as the economy starts to recover. It will also reduce anxiety, knowing you have a financial safety net if you ultimately need to use it.
The pandemic has created significant financial stress for everyone, but keeping your cool and making prudent financial decisions will help see you through to the other side.