With COVID-19 making headlines around the world, it’s normal to feel uncertain about many aspects of life right now, including your finances. Even if you don’t catch COVID-19, you could be financially impacted by the fallout.
Throughout this tumultuous period, your health is obviously the No. 1 priority. You can, and should, make your best efforts to stay healthy. However, maintaining your financial health during this situation can be critically important. With a solid handle on your finances, you’ll be better prepared for whatever life throws your way in the coming weeks and months.
Let’s take a closer look at how you can keep your finances in order as the COVID-19 situation develops around the world.
Stretch Your Savings Farther
One potential impact of the current situation is that you could be required to stay home for weeks at a time. With that, you may lose your income for that time if your employer doesn’t offer paid leave or the ability to work from home. Instead of panicking, focus on finding ways to stretch your money farther.
A few ideas include cutting nonessential spending from your budget. Since you’ll be staying at home more, you’ll likely be able to easily save money that would have been spent eating out and traveling.
In addition to these potential savings, you can find free ways to entertain yourself at home. For example, many libraries are offering their always-free resources such as e-books and audio books.
Boost Your Emergency Fund
If you’re lucky enough to be able to continue working from home, then consider boosting your emergency fund. After all, you’ll mostly be at home in the coming weeks, so it will be easier to resist the temptation of spending money on impulse buys. Plus, you’ll be saving on your regular commuting costs.
One easy way to boost your emergency savings is to save your tax refund. If you haven’t spent the funds yet, consider stashing it away to help weather any storms that come your way.
Take Stock Of What You Have
Shelves across the country are being emptied of everyday essentials such as food and toilet paper. Before you give in to the impulse to panic buy everything, take stock of what you already have at home. Many of us already have well-stocked pantries that could help us survive for many weeks.
Personally, I am guilty of having enough pasta and rice on hand to feed us for a month thanks to a recent BOGO sale at my local grocery store. Plus, I have several bottles of hand soap in our bathroom cabinet compliments of a semiannual sale that always seems to keep my cabinets full.
With that, I have not gone out of my way to clear the shelves of emergency supplies that I might need at some point. Instead, I realize that others may not already have these supplies on hand. I’d rather use what I already have and let someone who needs those goods today.
Take a look at your current pantry and bathroom cabinet. If you already have some supplies on hand, then consider holding off on stocking up. Your wallet and your community will thank you.
Contact Your Lenders And Landlords For Help
If the impacts of this virus have affected your income, then you may run into trouble keeping up with your bills. Without an emergency fund, you could find yourself in dire straits quickly.
Although it can be scary, make sure to approach the situation with a clear head. Instead of allowing late payments to damage your credit score for years, reach out to your lenders and landlord. Contact them as soon as you realize that you’ll be unable to make an on-time payment.
If you’re a Quicken Loans®1 client, you can apply for assistance online. Forbearances are being offered as an initial step. This is a temporary pause of your mortgage payments. Once you’re able to resume payments, they’ll go over your repayment options. For more info, check out this post on COVID-19 response.
Before you make contact, prepare to explain your current situation and how much you can afford to pay at the moment. Also, consider when you believe you’ll be able to resume your normal payments.
You might be surprised, but lenders may be willing to work with you throughout this difficult time. Most lenders will go out of their way to help you successfully navigate this difficult financial time, especially if you’ve consistently made on-time payments in the past.
Keep Calm And Stick To Your Investment Plan
One apparent impact of COVID-19 is the increased volatility of the stock market. Although it can be tempting to panic and sell your stocks during this time of crisis, that’s not a good option right now. In fact, choosing to sell your stocks now could result in a realized loss of thousands of dollars.
It can be extremely painful to watch the value of your nest egg crumble. However, it’s overwhelmingly likely that the market will recover. Personally, I never planned on touching the money I have invested in the market until retirement, so I’m not going to change that mindset now. Instead, I plan to hold on for what looks like a wild ride ahead. I fully expect a bumpy ride, but I know that selling my stocks for a 20% loss is not the answer.
Evaluate your investment plan and find the willpower to stick to it.
Consider Taking Advantage Of Low Interest Rates
As the feeling of uncertainty takes hold around the world, interest rates are dropping. If you have a good credit score, then you can likely take advantage of extremely low rates for all kinds of borrowing.
If you have outstanding debt such as a mortgage or student loans, then now is the time to refinance. You could potentially save thousands over the course of your loan. Although refinancing can involve quite a bit of paperwork, it will give you something to do from the comfort of your home as we tackle the weeks ahead. Quicken Loans can help you look for refi options.
The Bottom Line
The world is on edge due to the COVID-19 situation, but that doesn’t mean your finances need to suffer. Take action to build your emergency fund before the virus impacts you in any way. If you have already been affected by the virus, then take steps to mitigate the long-term financial damage.