The novel coronavirus, COVID-19, has upended life as we know it, and our budgets along with it. While many people are taking proactive and even drastic measures to protect their physical health, not many are doing the same for their financial well-being — but they should be. With the economy in turmoil, unemployment numbers rising at depression-era rates, and stay-at-home orders being extended across the nation, making moves to protect your money now can pay off dividends in the future. So, how can you protect your money if you’re not currently making any? The following advice could help.
Manage Your Debt
Though the volatility of the market is worrisome right now, it could work in your favor. Because so many people are unwilling to pull out loans or open lines of credit when the state of the economy is so uncertain, lenders are forced to lower their rates to encourage borrowing. Use this to your advantage by contacting your creditors and lenders to see about lowering your rates.
Start small, with your credit cards. Gather all your cards before you and contact each credit card company. See if you qualify for lower interest rates. If you have several cards with outstanding balances, consider transferring them to a no-interest or low-interest balance transfer card.
Next, contact your mortgage lender to see if you can refinance your loan. Refinancing can not only help you save money now, but it can also help you spend less on interest in the future.
Finally, if student loan debt is straining your budget, look into deferment or refinancing. Call your student loan servicing company to discuss options you may qualify for. A personal financial advisor, such as those at Summitry, can also help you assess your debt and explore your options.
Keep Your Savings Intact … For Now
Though interest rates on your savings accounts will probably go down (meaning you’ll earn less on your money), your principal balance will remain the same. Eventually, the market will recover and the rates will go back up. If your financial situation allows for it, keep your savings safe and separate. Better yet, keep adding to it. Only dip into your savings and/or stop contributing if your financial situation changes significantly during COVID-19.
Though you should make budgeting a part of your everyday life, smart money management can help you control concrete challenges you face today as well as plan for those you may face in the future. Some budgeting tips you can implement today are as follows:
- Trim Your Spending: This shouldn’t be too difficult to do, as most stores, cafes, restaurants, salons, and other so-called luxury businesses are closed at the moment. However, look for other ways you can reduce your monetary output. Streamline your streaming services so you can watch all your favorite shows without breaking your budget. Order takeout only once a week instead of once a day. Cancel all those subscriptions you don’t need or use, such as your makeup, magazine, and workout app subscriptions.
- Stock Up Smartly: Buying one hundred rolls of toilet paper is never a practical or money-wise decision. Stocking up on canned foods and medications, however, can be. Though you shouldn’t hoard essential supplies, do get what you need now, plus a few extra things, “just in case.”
- Allocate Money Wisely: You’re saving money on gas and daily takeout, but you’ve recently found yourself in need of a full-time babysitter. Instead of using the money you save on a pair of new shoes or a brand-new television, allocate it to where it’s needed for the time being. And if it’s not needed? Use this time to start building your nest egg.
COVID-19 has caused a lot of uncertainty, especially where finances are concerned. You can better manage that uncertainty and maintain optimal financial health by managing your debt, keeping your savings intact and spending wisely.