The coronavirus pandemic has taken the world by storm, and over the last couple of months daily life has changed drastically for millions of people around the globe.
While many Americans are worried about getting sick, there’s one thing people are even more concerned about:
How they’ll manage their finances during these uncertain times.
Financial concerns are escalating amid the pandemic
As more businesses are forced to close their doors, many workers have been let go or asked to take a few weeks of unpaid leave. For those who live paycheck to paycheck and depend on this income just to get by, this pandemic could cause significant financial distress.
In fact, while only around 63% of Americans say they’re worried about potentially getting sick from the virus, according to a survey from FinanceBuzz, 68% are concerned about being able to pay their bills. Furthermore, nearly 80% of survey respondents say they’re worried about facing unexpected costs during this time.
Financial problems are a real concern, especially since it’s difficult for many workers to find new jobs at the moment. There’s also no telling how long this pandemic will last, and there’s a good chance the country could be headed toward a recession. For some households, going weeks or months without income simply isn’t an option.
If you can’t afford to pay your bills, first reach out to creditors to see if there are any hardship programs you can take advantage of. These are trying times for everyone, and banks, credit card issuers, and mortgage lenders may be willing to help if you can’t afford to make payments right now. You may also be able to file for unemployment or receive assistance through a local food pantry or other nonprofit if you’re having trouble making ends meet.
In addition, there are a few other things you can do right now to improve your financial situation if you’ve lost your primary source of income.
Saving more while living on less
Now more than ever, it’s critical to have a healthy emergency fund to fall back on if you lose your income. While ideally you would already have a stash of savings set aside before an emergency pops up, there are ways you can save more even in the middle of an emergency.
To start, comb through all your expenses and cut anything that’s not absolutely necessary. Perhaps there are subscription services you don’t need right now, for example, or maybe you can start buying generic brand items at the grocery store instead of name brand. You’re probably already spending less now than you were a few weeks ago, because if you’re stuck at home, you’re not spending money on transportation, dining out, or grabbing drinks with friends. But every dollar counts — so if you can cut back on your expenses even a little, that can go a long way toward building a robust emergency fund.
The next step is to figure out where you want to park your cash. You’ll want to store your money someplace where you’re earning a relatively high rate of return, but where you won’t face penalties for withdrawing it before a certain time. For those reasons, a high-yield savings account is ideal. Many of these accounts have interest rates of close to 2% per year (which is far higher than the dismal fraction of a percent you’d earn with a standard bank savings account), but you can also withdraw your money at a moment’s notice.
Finally, if you can swing it, consider looking for side gigs you can do from home. If you’ve ever wanted to start your own online business, now is a great opportunity since you likely have loads of free time on your hands. Maybe you’re a crafter and have always dreamed of selling your products online, or perhaps you’re a teacher who can offer tutoring from the comfort of your living room. No matter your passion, it may be worthwhile to look into pursuing online work to make a few extra bucks.
If you’ve lost your income due to the coronavirus pandemic, it’s normal to feel stressed and worried about the future. But try your best not to panic, and instead create a game plan to help you get through these next few weeks or months. By being strategic with your spending, you can save more and do your best to prepare for the unexpected.
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Source: The Motley Fool