The COVID-19 pandemic continues to spell uncertainty when it comes to the economy and people’s personal finances. If you’re looking to plant your feet on solid financial ground in these unpredictable times, here are six suggestions to help you navigate your money.
There are a variety of sites that offer resources to protect and manage your finances during the crisis, such as the Consumer Financial Protection Bureau (CFPB). 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 and small businesses. Research your financial options. You’ll likely find something that can help you stay stable in the pandemic.
If you have the means, you should also consider securing your finances down the road with a fixed index annuity, or FIA, which can provide you guaranteed income during your retirement. An FIA allows you to contribute a set periodic amount or lump sum, and then your money can grow tax deferred with an option to receive guaranteed payments throughout your retirement regardless of how the stock market performs.
Sticking to a budget starts with being aware of how quickly you can spend money and being proactive about reigning it in. It requires you to pay attention to where, when and how you spend. During the pandemic it's hard to know what might affect your personal finances in the coming months, but by dedicating yourself to a trimmed-down budget, you'll be better prepared for any new changes that may come. Try writing down everything you buy for a month to find out where you may be spending unnecessarily.
If you haven't been careful with your spending in 2020, it's a good idea to reevaluate your habits and priorities. Some of your everyday expenses may already be reduced in the pandemic, like travel, but you should make sure that the money you've saved in one line of the budget isn't going someplace else. To prioritize, you need to ask yourself if there are any costs you can cut back on.
Start by crafting a list of essential and non-essential expenses. Non-essential expenses are things like TV apps, subscriptions and memberships. Essential expenses are things like rent or mortgage, groceries, utilities, and credit card and loan payments. Rank your expenses by importance. This will make it easier to start cutting out expenses that appear at the bottom of your list. While chopping out some of the things you enjoy may be difficult, remember that these cuts may just be temporary.
The U.S. government just passed a second stimulus bill and will be sending Americans another round of checks. It’s important that you have a plan for those funds when you receive them. Look to spend the money on essential living expenses or to pay down credit or other loans. If you don’t need the stimulus check to get your finances back on track, consider putting the money into savings or an emergency fund.
While it may be difficult to start an emergency fund in an uncertain time, it's crucial that you try and make plans to create a safety net. Unexpected events like the current pandemic can severely affect your present finances and your future if you aren’t prepared. Experts recommended you have enough savings to cover 3-6 months’ worth of expenses. By investing in an emergency fund now, you'll be able to get through the next crisis.
You may feel overwhelmed or helpless in the pandemic. Consider working with a financial professional, who can assist with planning, savings, retirement and paying down your debts.