Your Finances in Uncertain Times.
COVID-19 has had a negative impact on many parts of life including finances. With 78% of Americans living paycheck to paycheck, most people cannot afford the negative financial effects of the COVID-19. So what does this mean for you and your family? Should you be stocking up on paper supplies and food? Should you stop investing in your retirement accounts? What effects will this have on your retirement? Should you go on vacation? The best guidance I can give you at the moment is to go into “storm mode” until this situation has passed.
REMAIN CALM. The worst financial decisions are made out of panic and fear. Do not make any big financial decisions during this time. Do not let worry and fear dictate your actions. Take time to think through any financial decisions you make. Focus on the things you can control.
FUND YOUR 4 WALLS. Always fund your 4 walls before you pay anything else. Your 4 walls consist of housing (including utilities), food, transportation, and basic clothing needs. Do not pay your credit card bills if you can’t buy food for your family. The 4 walls come first!
PAUSE PAYING OFF DEBT? It’s time to assess your risk. Is it possible that you will be laid off or your work hours will be reduced? If so, It’s time to put your debt payoff plan on pause. Now is the time to pay minimum payments only. I recommend saving any extra money during this time of uncertainty. When this storm has passed you can go back and pay off debts with any money you have left in savings. If your income is reduced and you can’t make minimum payments it’s important that you stay in contact with your creditors.
(Note: If your job is secure (you may even be working overtime right now), make a plan for how you will spend the extra money. Now would be a good time for you to make a plan to budget and pay off debt.)
AVOID FRIVOLOUS SPENDING. This is not the time to purchase high ticket items. Before you make a purchase ask yourself if it is a need or a want. If you aren’t sure, take 3 days to think about it. Now is also a good time to review all of your accounts and stop any subscriptions or memberships that you do not use or need (magazines, gym, and/or apps). Consider canceling cable or call and ask for a discount. Stop using your credit cards. Use your debit card to avoid overspending. Your priority should be cutting your expenses. Control what you can control.
SAVE. Most Americans do not have an Emergency Fund. Now is a good time to save as much cash as possible until you are more financially stable. Look around your house and find items that you can sell online. Consider a side-hustle. Consider automating your savings either through your employer or bank. Force yourself to save money during this time.
We are certainly experiencing unprecedented times. This situation is constantly changing. If you need a more custom plan for your finances that includes accountability, please don’t hesitate to reach out to me. I’ll be happy to discuss your situation and help you develop a plan to weather this storm. I have helped numerous families prepare for financial times like these.
