The coronavirus pandemic has spread across the globe faster than anyone could have expected. In March, counties and states shut down almost overnight as a heavy slew of restrictions were imposed. Some of the main stress points in these health orders were for residents to remain in their homes and only go out for essential business. This new practice, a newly coined pandemic term called social-distancing, was instituted to decrease the spread till a vaccine is successfully developed. Unfortunately, 4 months later, the U.S. is having trouble with containing the virus as we still see cases rising every day. This increase is definitely hurting brick-and-mortar businesses as they are now being forced to change their business models to adapt to this unforeseen change. In February, before COVID-19 hit the US, unemployment rates were at 3.5% ─the lowest they’ve been in a decade─ but are now at a staggering 11.1% in July. We must all adjust our money habits to stay on top of our finances during this unpredictable economic slough. Here is a list of things you can do to stay money smart during the pandemic:
1. Build your emergency fund
If there’s one thing about the pandemic that nobody knows; it’s how long it will last; there is hardly a precedent to look at! Vaccine advancements by Pfizer and Moderna look promising but this is all speculation until a vaccine is actually released to the public. These uncertain times make it of utmost importance to pool together some money for yourself and your family. Experts recommend setting aside 3-6 months’ worth of living expenses in a high-yield savings account. This money can be used for medical bills and unexpected expenses or losses. During the pandemic, nobody knows what to expect, it’s better to be safe than sorry!
2. Cut your spending on luxury items or your “wants”
With so many Americans losing their jobs this summer, it is crucial for everyone to significantly cut down on luxury spending. Items like clothing and jewelry may satisfy immediate wants but will only come back to bite you in the foot when you find out that one of your family members has fallen to the virus. Rather than buying luxuries online, focus on supporting small local businesses, and buying necessities like food and groceries. Also, getting food and groceries delivered will set you back a premium with taxes and fees, so focus on cooking at home and safely picking up your groceries in-store if you feel comfortable doing so. Cutting your spending on frivolous items now is a great measure to ensure you stay financially afloat during this unprecedented time. Trust me you will appreciate this post-pandemic!
3. Make alternative plans for fun
Plans with friends ruined by a huge pandemic? Use FaceTime or Zoom to have a virtual dinner together. It’s much cheaper (and safer) than going to a restaurant.
Trip canceled? Have fun at home! Have a binging session or a self-care day.
Movie theaters closed? Use the Netflix Party extension on Google Chrome to enjoy shows and movies with your friends virtually!
4. Move your money as needed
If your money is spread thin due to COVID-19, be smart about where it is allocated. For example, many people are working from home and driving less so you could always contact your car insurance and change your premium to lower miles. This way you can save money on the miles you’re not driving. Now that you’re home all day, be smart about how much you’re paying for electricity. Doing your laundry usually leaves a hefty electricity bill so check with your electrical service provider to see when they charge the least for electrical consumption. Finally, transfer the money saved by these tricks into your emergency fund. There is no reason to make these changes only to splurge and go into huge financial debt; going into debt is the last thing anyone should do, especially during the pandemic.
5. Adjust bills/mortgages
If you are struggling during COVID, it may be worthwhile to choose a cheaper internet or phone service plan temporarily. If necessary, cancel subscriptions like Netflix or Amazon Prime and take up a new hobby like painting to stay busy. As for mortgages, if you have one, refinancing at a lower rate could help you at this time, and can ensure you spend less on interest over time. The federal reserve bank has cut interest rates to almost 0% until 2022 to rehabilitate the economy so make sure to take advantage of that. There are, of course, some costs to refinancing your mortgage, so do your own thorough research!
We hope these tips helped you! Don’t hesitate to reach out with questions and we will do our best to help.
- Zack Janczura 7/21/2020