Personal Finance During COVID-19: A GuidePat Fontana
The COVID-19 pandemic has had a significant impact on many people’s physical health, mental health, and financial health. When states like Arizona issued orders for its residents to stay home, to not go to work, and to not go out to eat or shopping in March 2020, businesses had to close temporarily. Many of those businesses had to lay off workers and may not be reopening because of the financial impact of the coronavirus. It is critically important for you to understand more about personal finance during COVID-19 and you can use the following as a helpful guide.
The nation’s unemployment rate in April 2020 had risen to 14.7 percent, the highest since the data was first recorded in January 1948. Less than a fourth of Americans surveyed in mid-April said that the coronavirus crisis had not impacted their financial situation.
If You Are Still Employed
If you are among the essential workers and others who have been able to continue working through the pandemic, you can use this time to focus on maintaining your fiscal health, along with your physical health, so you can be better prepared after you emerge from the current economic crisis.
The financial experts at NerdWallet recommend that if you are still employed and are fortunate to have financial stability, that you tend to your personal finance during COVID-19 by:
1. Turning your expenses into savings. Use the money you would normally spend on things like commuting, gym memberships and traveling to pay off debt or build up your savings.
2. Getting a jump on your student loans. Since payments on most federal student loans are suspended, interest-free, through Sept. 30, any payments you make between now and then will go directly toward the principal on your loan, which could save you money in the long run.
3. Ramping up your 401(k) contributions. If your emergency fund is solid, and you aren’t carrying a load of credit card debt, consider giving your retirement savings a boost.
4. Saving money on your mortgage. Interest rates are falling so now may be a good time to investigate the possibility of refinancing your home.
5. Giving back to your community. Although this piece of advice does not directly affect your personal finance during COVID-19, it will certainly go far in helping others affected by the pandemic. If you’re still financially sound during the pandemic, support small businesses. Donate to your local food bank. Do your part to support those hit hardest by this financial crisis.
If You’re Unemployed
1. Apply for Unemployment. The rules for collecting unemployment payments have relaxed somewhat in response to the coronavirus outbreak. As soon as you lose your job, apply online through the Arizona Department of Economic Security.
2. Review and Reduce Your Expenses. Take stock of your expenses and determine which ones you can reduce, even if just for a little while.
3. Contact Your Creditors. Most banks are understanding during the COVID-19 pandemic and will work with you on repayment terms.
4. Create a Budget. Adjust your budget to your income, focusing primarily on your current needs. While the normal recommendation is the 50/30/20 rule (50% of your take-home pay dedicated to your needs, 30% for wants, and 20% for savings) your budget while unemployed during the coronavirus outbreak may be 85% needs, 10% savings, 5% wants.
5. Leave Your Retirement Account Alone. Unless it’s an emergency, an early 401K withdrawal—subject to an early withdrawal fee—is not recommended.
6. Find a Part-Time Job. Many businesses that are providing essential services, such as grocery stores, are actually hiring now.
7. Breathe. Managing finances when you are unemployed can feel scary, frustrating, and impossible, but when you take a step back to assess the situation you can find workable solutions.
CLEAR VIEW BUSINESS SOLUTIONS CAN HELP DURING COVID-19
At Clear View, our mission is to make complex financial data and business solutions understandable for you and give you access to the information you need to plan for your personal and business success. We will continue to help you manage your business finances throughout the COVID-19 pandemic. Learn more about how we can help you and your business by contacting Clear View Business Solutions to speak to our team about our services. Give us a call at (520) 544-0177.