After a crazy start to 2020, your “New Year – New You” vision will probably need revising. And no more so than your financial goals.
Exercising more and saving money are the most popular 2020 New Year’s Resolutions. As the Coronavirus continues to spread around the world and across the U.S., staying physically healthy is a top priority. At the same time, you likely are juggling new challenges where your finances are concerned… For the sixth week in a row, millions of American workers applied for unemployment benefits, seeking financial relief as businesses remained closed during the Coronavirus pandemic.
First-time claims for unemployment benefits totaled 4.4 million in the week ending April 18, after factoring in seasonal adjustments, the US Department of Labor said. Without those adjustments — which economists use to account for seasonal hiring fluctuations — the raw number was 4.3 million. To make matters even worse, a new study just out showed 71 percent of jobless Americans did not receive their March unemployment benefits.
1. Make a Crisis Budget
Have you lost your job or had your income reduced during the COVID-19 crisis? If so, the first step you should take is to make a crisis budget.
Figure out how much money you have to work with for budgeting purposes. This total may include remaining funds from your checking account, an emergency fund or other sources. For example, if you have $1,000 tucked away for a summer beach vacation, you may want to include that money in your budget if it can help you make ends meet during this crisis. (Remember to check the rewards balances on any cash back credit cards you hold. You could potentially have access to extra funds that you can transfer to your bank account.)
Next, figure out your essential expenses. These may include:
- Housing (rent or mortgage)
- Basic utilities (power, water, etc.)
Eventually, your new budget may include unemployment benefits or other sources of income. However, it could take several weeks to access funds from either of those sources. In the meantime, your crisis budget will let you know how much cash you have to work with right now.
2. Put Your Savings to Work
If you have savings to turn to during this crisis, you’re in a fortunate position. Yet that doesn’t mean you should dive right into those funds without a plan. Yes, the COVID-19 crisis may be exactly the type of occasion when it’s okay to draw money out of your savings account. Still, with the amount of uncertainty in the U.S. economy at this time, it’s important to tap your emergency fund as wisely as possible.
Next, if you feel like your savings account is netting you nothing in interest — and that’s the case for most, according to the national average rate of 0.09%— it might be time to look elsewhere. Many online banks can do much better. CIT Bank, for example, currently beats the national average interest rate on savings by 20 times over. Open an account with just $100 and deposit at least $100 per month to keep that rate, with no account opening or maintenance fees to worry about.
3. Get SMART
If you’re setting new objectives for yourself in light of the COVID pandemic, there’s a proven way to ensure you implement the lifestyle changes necessary to achieve them. It starts by setting goals the right way, which means setting SMART goals. SMART stands for specific, measurable, attainable, relevant, and time-bound:
- Goals should be as specific as possible, even if this means breaking them down.
- If a goal is not measurable, it is not possible to know whether a team is making progress toward successful completion.
A goal needs to be achievable, but at the same time it must not be too easy.
- A goal that supports or is in alignment with other goals would be considered a relevant goal.
- A time-bound goal is intended to establish a sense of urgency.
And the good news is, you can do these steps now, while you are thinking about how you want to come out of this crisis and while you have time on your hands during this period of social distancing.
4. Seek Financial Assistance
The news surrounding the Coronavirus outbreak updates constantly, including relief options available. Consequently, it’s important to create a plan for both your household and your finances to ensure you’ll be ready for whatever challenges you might face.
Check out this list of resources and topics for financial support including:
- General COVID-19 news and updates
- How to deal with unemployment and income loss and what side gigs to get
- What you can do about rent and utilities
- Food, water, and other shortages
- Relief for car owners and buyers
- Delaying payments for credit cards and loans
- Access to cheap loans
- Help with childcare and education
- Tax relief for individuals and businesses
- Student loan relief from the government
- Help for seniors and retirees
- The latest news on federal government aid and economic stimulus
- State and local aid and economic stimulus
5. Adjust and Adjust Again
While your budget likely works for everyday living, recent changes in the economy now make it a good time to reevaluate. Your budget should be flexible under your current circumstances. If your cash flow has changed because of reduced hours or a layoff, your budget should be adjusted until your income becomes more stable. Regardless of how your situation has changed, consider making these budget adjustments:
- Pause all your budgeting for “fun money” or “travel money” and reallocate to your emergency savings.
- Allocate any extra to emergency savings.
- Adjust your grocery budget to allow for purchasing two-weeks’ worth of groceries at a time. This way, you can reduce the amount of time in public places like the grocery store.
- Reallocate funds for certain expenses like gas/transportation, beauty appointments, restaurants, in-store shopping, etc. to your emergency fund because you probably won’t be spending as much in this area.
- Avoid supplementing in-store shopping for unnecessary online purchases.
- Review your other monthly fixed expenses (rent/mortgage, utilities, auto loan, etc.)
Coronavirus has changed many aspects of American life. And while this crisis is hopefully temporary and life will soon return to a new normal, the pandemic may very well have a more long-term effect on your own plans for the future or on how you manage money.
By following the advice above, hopefully you can make your new financial goals a reality and can effectively re-prioritize your spending to accomplish the things that the crisis clarified are most important to you.
COVID-19 UPDATE from TLC Loans
As the COVID-19 crisis continues, more individuals than ever are going to face economic hardships, and these resources will become more important than ever. Due to the ever-changing circumstances of this crisis, actions taken by the government are changing frequently. For updates and resources to help navigate the path forward, you should keep up with the actions federal, state, and local governments have taken to combat COVID-19 in your area.
If your financial condition has been negatively impacted by the Coronavirus (COVID-19) and you are worried about your financial well-being, TLC Loans remains committed to assisting you in your time of need. If you need a personal loan, we can help! Find out more and apply for your loan here today.