Since March, Americans and people of the world have been grappling with the effects of the coronavirus pandemic. Covid-19, along with causing illness and loss of life at a catastrophic level, has also had severe economic and financial repercussions.
While we are at a phase of reopening the economy, there are still many restrictions. People have lost their jobs, their businesses, and are facing serious financial stress.
It’s important that even as we work toward returning to a sense of normalcy, we make smart financial decisions. It’s possible that the economic consequences of the coronavirus pandemic could outlast even some of the health effects.
The following are important financial tips to keep in mind during this time.
Continue to Cut Your Non-essentials
Interestingly, Americans’ savings has grown during this time. We’re a country notoriously known for having limited savings set aside. Still, the coronavirus pandemic may have led more people to save what they were earning because they didn’t have as many places or ways to spend it.
You may, as a result of lockdowns or financial fears, have already cut your non-essential spending. It could be an excellent time to evaluate your budget and consider which cuts might be smart to keep.
For example, maybe online grocery ordering has led you to realize that you spend too much when you go into the store without a plan. Perhaps you can continue working out at home rather than paying for that gym membership, or cut down on eating at restaurants.
Build An Emergency Fund
If you didn’t have money saved before the pandemic, you might now realize how important an emergency fund is.
That could be one valuable financial takeaway from this whole situation—you need to have money in savings.
If you are cutting your non-essential spending, create a plan to set some of what you save aside in your low-risk savings account.
Investing in the Stock Market
The stock market remains one of the best ways to grow your money in the long-term. If you aren’t already invested in the stock market, the early days of the coronavirus outbreak in the U.S. could have been a good investment opportunity.
The market was significantly down off its highs, and for people with an understanding of the fundamentals and a stomach for risk, there were potential deals to be had.
If you don’t want to be on the sidelines the next time there’s a similar situation, you should work now to learn the fundamentals of investing and how to make it work for you.
Educate yourself on things like investing in broad and diversified ETFs and mutual funds, so that you’re ready when you need to be.
If you have debt, you aren’t alone. Managing it could have been stressful during this time, especially if you weren’t working or you have a business that had to close down.
How you manage your debt is essential to long-term financial success.
First, if you have credit card balances, it might be a good time to see if you qualify for a card with a lower interest rate or perhaps an introductory no-interest period. You can then transfer your balances and cut your costs.
If you have a mortgage and you qualify, it might also be a good time to think about refinancing. If you can refinance, you can get lower payments, and you’ll spend less on interest over the long-term. Just make sure that the costs that come along with refinancing aren’t higher than the financial benefits.
There was also an announcement of a potential student loan interest waiver, but you could consider refinancing student loans too.
If you’re re-evaluating how you manage finances, make now the time you get everything organized. Create a calendar or system for tracking deadlines for all of your payments, so you’re never paying late fees.
If there’s a chance you won’t be able to make a payment on time, contact the lender right away. Most lenders are willing to work with people right now, if you’re proactive and explain the situation.
While it’s a tough time for everyone, you can use this as an opportunity to rethink how you manage your money. It will prepare you for the future and other possible downturns like we’re experiencing now.