The coronavirus pandemic has shown us a world we never thought we’d see. There are empty supermarket shelves, long lines at food banks, and astronomical unemployment rates. It’s a dangerous and difficult time, especially for essential workers and those on the front line, fighting this very real enemy. As it always does, the country moves forward, and it’s clear now that the panic buying of toilet paper made everything feel more chaotic than it was. Moreover, if you panicked and thought it would be a good idea to take your savings out of the bank, put it back! Banks are still operating, and deposits are still secure and insured, while large amounts of cash stuffed in your mattress aren’t safe at all. There are better ways to manage your money during a period of economic downturn.
If You Can’t Pay Your Bills
If you’ve lost your job and can’t pay your bills, know that help is available. For people who’ve lost their job or faced furlough, many lenders and landlords are offering relief for folks who’ve found themselves jobless due to coronavirus, such as payment deferment. For most states, unemployment benefits last up to 26 weeks, but they’ve been extended another 13 weeks for a total of 39 weeks of benefits for the duration of the pandemic. Additionally, those receiving unemployment benefits will receive an additional $600 per week to help cover the cost of living during the crisis. Even if you’re expecting to get your job back when businesses begin to open, you can still collect unemployment; so, if you haven’t signed up yet, do so immediately. Your payments will be retroactive to the date on which you lost your job or faced furlough.
The Consumer Financial Protection Bureau has a lot of good information on resources that are available to unemployed consumers and where to turn if you can’t pay your bills.
Take Control of Your Spending
If you’re an essential worker who never stopped working, or you’re one of the lucky ones who were able to adapt their job to be done at home, now is the perfect time to take control of your finances. When a crisis occurs and job security is uncertain at best, having a large amount of debt hanging over your head compounds the stress and anxiety of the entire situation. It’s a good time to get your finances in order during this period of economic downturn.
Make a Budget
The coronavirus has taught us many things, one of which is how to live minimally. Even as stores begin to open, the number of shoppers allowed in at a time has become more complicated. For the last few months, we’ve been conditioned to buy only what we need, so it shouldn’t be too difficult to hold onto that thought process as we move forward. Now is the perfect time to make a budget so that when things get moving again, you already have a handle on where and how much to spend.
Beef Up Your Emergency Fund
If you don’t have 6 months’ worth of expenses saved up, now is the perfect time to do so. If you don’t know what to do with your stimulus money, put it in your emergency fund. You were lucky this time if you didn’t need your emergency fund, but you might not be so lucky next time. Your emergency savings isn’t just to cover the occasional pandemic; it’s there for job loss, car repairs, unexpected medical bills, and anything else that might come up. Having money set aside will keep you from putting things on credit.
Invest in Your Retirement
Many people have their entire retirement savings in their 401(k) plan, and to say the stock market’s current volatility is making them nervous is a bit of an understatement. The good news is the stock market will likely bounce back over time, so unless you’re close to retirement age, your investments should come back up. If you’re a short-term investor, it may be a good time to invest, but don’t use retirement savings for this. If you have your emergency fund funded, you might consider using your stimulus money or money that you’re saving by not going out to stores and restaurants to invest in a secure retirement account, such as an IRA.
Eliminate Your Debt
Now that you’re living on a budget, it’s a good time to deal with your credit card debt or other outstanding debt. With interest rates being so low, a consolidation loan could help get all your debt into one easy monthly payment that will save you money and get it paid off quicker than you can by making minimum monthly payments. Debt consolidation companies such as National Debt Relief can help you negotiate settlements with your creditors so you can get them paid down even faster.
Just as we’ll heal, so too will the markets and the economy. This period of economic downturn won’t last forever. If you can get control of your finances now, you can have a better and more stable financial future.