Tips to help you stay financially stable during the COVID-19 crisisMonday 26 October 2020 | Reading Time: 5 minutes
The uncertainty of the current pandemic could impact your life and your financial security. In order to keep your finances in order, it’s important to have a focused plan. Here are seven strategies to help you manage your finances effectively in the crisis.
1. Create a new budget
In order to help navigate the current crisis, you could reevaluate your budget to ensure you aren’t spending beyond your means. If your balance comes out negative, you could consider cutting back on your expenses or make adjustments. Once you have a budget in the black, you may want to review it periodically. Your financial situation can change, especially in these unpredictable times, so you’ll want to be prepared to adapt your budget to whatever financial situation occurs.
2. Reevaluate your spending
Good spending habits could help your money go further, especially in the pandemic. If you haven't changed your spending habits, take the time to reevaluate them by reviewing your purchases. Some of your normal expenses may be reduced in the pandemic, such as travel and entertainment, but you may be spending too much money elsewhere. Here are two ways to help you start reducing your expenses:
• Limit your online shopping — Now that you’re spending more time at home, you may feel the urge to purchase items online to keep yourself busy. Make sure you don’t go overboard with your spending.
• Limit or avoid eating out at restaurants —Not only is it safer to stay away from crowded places, but you may also save money by buying groceries and cooking at home.
3. Start an emergency fund
If your job hasn’t been affected by the pandemic, consider bolstering your emergency fund or starting one.
4. Contact lenders
If you are struggling to keep up with your student loans, mortgage, or other debt, call your lenders and discuss possible payment options. Many companies and institutions have hardship programs to assist you when your financial situation becomes difficult. Lenders understand the negative effects of COVID-19 and will hopefully work with you to defer your payments or lower your interest rates.
5. Tackle credit card debt
The pandemic has forced shutdowns around the country and that means you may be spending less money on activities, dining, and entertainment. The money you save could be used to pay your debt more aggressively. By reducing your credit card debt, you’ll save in the long run because you won’t have to pay as much interest.
6. Research financial options
There are a variety of sites that offer resources to help you better understand your financial options. The Consumer Financial Protection Bureau (CFPB) offers resources to protect and manage your finances during the Covid-19 crisis. The CDC website also offers up-to-date information on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries.
You could also review other methods of securing your finances, such as fixed indexed annuities, or FIAs, which provide you guaranteed lifetime income during your retirement. FIAs guarantee no loss of premium due to market downturns or fluctuations. In other words, the value of your money will not decline due to market loss for as long as it is in the FIA and may have the opportunity for potential growth. For more about FIAs, visit the Indexed Annuity Leadership Council’s (IALC) new fixed index annuity page.
7. Meet with a financial professional
If it hasn’t already, the Covid-19 pandemic may have a significant impact on your personal finances. You may feel overwhelmed or helpless. Consider working with a financial professional, who can assist you with annuity options. To find the right financial professional who fits your needs, submit your information through our find an agent page.
The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.
Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from the accumulation value for additional optional benefit riders or strategy fees associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.
Neither Midland National® Life Insurance Company, nor any financial professionals acting on its behalf, should be viewed as providing legal, tax or investment advice. Please rely on your own qualified tax professional.