The coronavirus pandemic has brought unprecedented financial turmoil to our country – and the world at large. However, with a few good financial practices, you can do your part to keep your finances intact. Here are ten small steps you can take today.
#1: Instead of Hoarding Toilet Paper, Stockpile Liquid Cash
Rather than bulking up on paper goods, focus on padding your savings account. Deposit as much as you can now: If you have to pull from the account, you will be in good shape when it comes to paying your bills, but if you don’t, you will at least have a leg up when the pandemic resolves.
#2: Diversify Your Income Streams
Before the pandemic hit, those with healthy salaries likely never considered adding an additional income stream to the mix. However, with layoffs increasing daily, now is a good time to consider it. If you end up unexpectedly losing your job, an additional income stream can help you stay afloat.
Consider skills you can use to earn some extra cash. Power washing houses? Pet sitting? Teaching a virtual course? Pursuing a side hustle that you enjoy will energize you.
#3: Focus on Paying Off Your Credit Card Debt
Now is not the time to let your credit card balances carry interest. Pay them down as soon as you possibly can. Slash your discretionary expenses like takeout, cable TV, and non-essential subscription services so that you can funnel extra cash into paying down your debt.
#4: Get Ahead of Your Monthly Payments
If you have extra cash coming in, pay your mortgage or other essential bills ahead of time in the event the pandemic impacts your finances later. This is a good practice to develop even beyond the pandemic, as it can help you prioritize your essential expenses before discretionary spending consumes your paycheck.
#5: Decrease Your Monthly Expenses
If a layoff or other disaster strikes your family, you will want your monthly expenses to be as small and manageable as possible. Take any and all steps you can to trim your monthly bills. Start with the low-hanging fruit, like your cable subscription, takeout budget, cell phone plan, insurance premiums, and car payments and see what you can do.
For instance, if you are overpaying for two vehicles, can you sell one or trade it out for an older, cheaper model? If you are over-insured, can you cut back to lower your monthly premium payment? If you spend $300 a month on takeout, can you slash that and instead cook all of your meals at home for the next month?
These small sacrifices will pay dividends even if the pandemic does not substantially impact your family’s bottom line: You can invest the extra cash, deposit it into a high-yield savings account, direct it toward a debt snowball, or use it to make an essential purchase for your family down the road.
#6: Channel Frugality in Every Facet of Your Life
Do your part to keep your family financially secure by choosing to forego your favorite splurges, from your regular $4 coffee purchase to your wine club membership. Take the money you would have spent on nonessential luxuries and watch it earn interest instead.
Here are a few ideas:
- Cut your own hair.
- Challenge yourself to prepare every meal at home for a full week.
- Institute at least three “meatless” meals a week to keep your grocery bill slim.
- Brew your coffee at home instead of hitting the Starbucks drive-through.
- Temporarily ditch your Netflix, Hulu, or Disney Plus accounts and break out your old DVD player to run some old family favorites.
- Cancel your gym membership and opt for daily walks, runs, or free at-home bodyweight workouts.
- Commit to a “buy-nothing” month, turning down any and all non-essential purchases.
- Challenge your family to an “eat what you’ve got” week. Do not buy any new groceries but instead, creatively fashion meals only from the contents of your pantry, freezer, and fridge.
#7: Batch Your Errands
Instead of dashing from place to place three different times a week, strategically plan and batch your outings. Not only will you protect yourself – and your family – from potential coronavirus exposure by limiting your social circles, but you will also save on gas and wear-and-tear on your vehicle. Not to mention, planning your outings intentionally can help you avoid last-minute impulse purchases you otherwise would have made, like swinging by your favorite smoothie shop for a $25 green juice or aimlessly wandering the aisles of Trader Joe’s looking for treats.
#8: Protect Yourself from Scams
Scammers are capitalizing on the world’s weakened state. For example, recently, individuals claiming a connection to the CDC are contacting consumers to collect credit card information and social security numbers. Other scammers are placing robocalls to skim personal data.
Be extremely wary of unsolicited contact from suspicious sources or individuals and remember that it is okay to appear “rude” by hanging up a phone call or deleting an email if it doesn’t smell right. And when in doubt, ignore the contact: Most legitimate companies will not call you out of the blue seeking your sensitive personal information.
#9: Postpone Major Purchases
Until the economy bounces back, strongly consider delaying substantial purchases like a second home, a new vehicle, or an expensive vacation. Remind yourself that there will be a time and place for these luxuries – but right now it is prudent to save your funds instead.
#10: Protect and Preserve Your Savings
If you’re investing in a 401(k) or traditional IRA, continue to do so. However, if you’ve been investing aggressively in the market, consider pulling out or slowing it down. Take the funds you would have invested and instead, funnel them into a savings account with a strong interest rate.
In turbulent times, it is easy to descend into panic. However, stay calm, use your funds wisely, and most importantly, stay home. This will pass. Economies bounce back. You will be able to enjoy luxuries once again. For now, though, do your best to control what you can, starting with your finances.