Maintaining Your Financial Health During COVID-19

Maintaining Your Financial Health During COVID-19

 

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 number one 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.

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 audiobooks.

Increase 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.

Contact Your Lenders and Landlords for Assistance

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.

Some lenders are offering forbearances 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. 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 most 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 hard earned savings deteriorate. However, it’s overwhelmingly likely that the market will recover.  So, 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.  

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.