As the spread of the Coronavirus (COVID-19) continues, social distancing and stay-at-home orders in many parts of the country continue to impact life and the economy. We are experiencing an unprecedented time of anxiety and uncertainty. But now is not a time to panic. Like in other areas of life, uncertainty can be overcome with education and preparation. As you spend more time at home, hopefully staying safe, educate yourself and do what you can to take control of your finances.
The realities of the COVID-19 impact on the economy
In recent weeks, unemployment has skyrocketed at historic rates. Millions of people have been laid off (more than 10 million Americans filed for unemployment in March). The stock market has been volatile as investors try to predict the fallout of the virus and its impact on the economy. Even those who remain employed could see a reduction of hours and income in the coming weeks and months. These are scary times, to be sure, but there are a few things you can do to prepare and make sure your finances are in order.
1. Ask for help
At Merrick Bank, we're here to help. You can learn more about what we're doing for those affected by COVID-19 here.
If you have been laid off or your income has been reduced in recent weeks, there are a few ways you can find relief. First, the federal government has just approved a stimulus package that includes sending money to most Americans. If you haven't already received the money, it should arrive in the next couple of weeks. Look into unemployment benefits or find reputable employers seeking extra help due to high demand as a result of the Coronavirus.
2. Budget your money
Now is also the perfect time to take a long look at your finances. With more time at home, you can find out exactly how you’ve been spending your money, then make adjustments that will allow you to put more of your income into savings. Use the extra time to finally create and live by a budget. Compare your income to your expenses, categorize your purchases, and make goals that will limit your spending for each category type. Your budget is something you can take pride in. Living within your means and according to your budget can empower you during difficult economic times.
3. Start saving money
If you're able to do so, now could also be a good time to set aside funds and build up your savings account. While social distancing, you may have limited entertainment choices. And you’re probably eating at home more too, which can save you a lot of money. Use this time to build good savings habits and put some extra money away for an emergency, in case your income is affected or you have an unexpected medical expense. Consider putting some money in a safe, high-yield savings account to help you earn more interest and keep your savings separate from your other funds.
4. Pay down your debt
Paying off debt brings peace of mind, and in times of economic downturn, it can free up extra cash in case of emergency. You should pay down debt, but only if you’re financially able. Of course, you need to account for your necessities of life first. Make sure you have enough money to pay for food, shelter, transportation, and utilities for the foreseeable future. Don’t forget to make minimum payments on your existing debts, and if you’re comfortably able, start chipping away at what’s left.
5. Invest in yourself
Whether or not your income has been affected, now is a great time to look for ways to bring in extra money. Right now, that might mean investing in yourself and your education. Take advantage of the extra time you have at home to learn new skills or look into educational opportunities that are within your means. It might also mean picking up extra jobs or extra projects at work that will bring in extra income, while still keeping you safe. If your income or job has not been impacted, look at the present situation as an opportunity to further your worth to your employer.
6. Avoid scams
Unfortunately, the current pandemic has given rise to more than a few scammers, who are using their extra time at home to prey on people’s fears. The FCC is warning consumers against falling victim to scams offering virus cures, scam health insurance, and free home testing kits for the Coronavirus, to name a few. These scams can come via email, text message, or phone call. Be wary of these types of messages, and always safeguard your personal and financial information.
Our Final Thoughts
Now is a time of preparation, not panic. Do what you can to control your finances, educate yourselves about the realities of the economy and its potential impact on you. And adjust your spending and savings behaviors accordingly. A little preparation now can bring peace of mind, even in uncertain economic times.