Seven Ways To Handle Personal Finances During The Coronavirus Pandemic
Giving thought to your personal finances right now? So is everyone! The right personal finance tips are essential during a volatile time like we are experiencing right now with the coronavirus pandemic. Checking in with your personal finances is more important than ever. Many people have lost their jobs or have taken a pay cut, which has completely upended their livelihood. Now is the time to delve deep into your personal finances and see what you need to do to make it out the other side when the country returns to business as usual (or some form of that).
Below are seven ways to handle personal finances during the coronavirus pandemic
1. Revise your budget
During this time of uncertainty, your budget is essential to your personal finances. Many people have a reduced paycheck or they are now living off of unemployment. The moment your income changes, you need to head back to your budget and adjust it accordingly. Depending on what your current budget looks like, you may need to adjust to a bare bones style budget where the focus is solely on essential expenses. Even if you still have your job, unless you are 1000% certain your paycheck is not going anywhere, you don’t want to focus your money on non-essential expenses.
2. Log your spending
If you don’t know where and how you are spending your hard earned money, your personal finances are suffering. Although we are staying home most of the time, it is still important to pay attention to how you are spending your money. We all know how quarantining can be isolating so perhaps you are hitting the drive thru at Starbucks or hitting the drive thru for dinner too many times in a week. This would be a clear sign you need to invest in a coffeemaker and start meal prepping.
3. Reduce Your Fixed Expenses
Fixed costs does not mean they have to remain fixed. Take a look at expenses like auto insurance, cell phone, rent etc. If you need to search around for a different cell phone provider or lower your cell phone plan, this is the direction to go in. If you can rent a room to someone, this would significantly reduce your fixed expenses.
4. Building up your emergency fund is crucial to your personal finances
Having emergency savings is crucial to the health of your personal finances. If the current coronavirus pandemic doesn’t show you how unexpected events can turn your life upside down, I don’t know what will. This whole situation should really tell you how much an emergency fund is necessary to your financial health. If you have not started a fund yet, now is the time. If you are not living to put food on the table, it is a smart idea to start putting some money into this fund. Experts recommend building up three-six months worth of expenses.
5. Reach out to lenders: They want to work with you
Creditors, lenders and banks are looking to help consumers. Reach out to them directly and honestly explain your situation. Many creditors are offering things like waived late fees, waived interest fees, reduction in interest rates and more. There are many steps to take to make sure you are not financially ruined by the coronavirus. Read here to make sure you are covering all bases.
6. Cancel subscriptions and memberships
In an effort to make paying bills easier, many people have signed up for recurring billing on not just essential expenses but non-essential ones as well. That gym membership and that auto-reload on your Starbucks card need to go bye bye if you are taking a financial hit right now. It is the small automatic charges that we often forget about and really add up over time. These small amounts can then be added to savings or towards paying those essential expenses.
7. Take dividend payments as cash on your investments
If you have investments that are still paying out dividends, it may make sense for your situation to take them as cash instead of reinvesting them. Look at it this way, depending on when it goes back to “business as usual” the cash you are accessing will hold its worth. No you don’t get the benefits of of compounding from your re-investments but the cash buffer is more important during a uncertain crisis like the one we are experiencing now.
Staying on top of personal finances is essential
Your personal finances should always be top of mind. Even more so when the economy is unpredictable. By using the above strategies, you will help keep your personal finances in check so that when the world returns to normal, your personal finances are intact.