The coronavirus situation has caused many of us to reevaluate the way we save and spend money. For some, this pandemic has created extra financial burdens. Others may be looking for the best ways to save and prepare for the end of the crisis, or even how to spend the extra cash they have due to eating out less or canceling trips. No matter what your current situation is, your experts at LBCU want to reassure you that we are here to help. Here are a few pieces of advice for how to handle finances during COVID-19.
Evaluate Your Budget
This is always a great first step for any financial situation – in fact, you should be reviewing your total budget and overall financial goals at least once a year, if not more often. Consider our advice for getting started with a budget.
If this crisis is straining your finances, creating a budget is especially important because it will allow you to find areas where you can trim down and protect your personal finances during the pandemic.
If, on the other hand, you’re one of the fortunate people whose finances are mostly unaffected, evaluating your budget is still an important first step in dealing with this situation. Identify areas where your spending has gone down – if you used to drive to work, maybe you’re spending less on gas. If you stopped eating out regularly, maybe you have more money left over at the end of a typical week. Consider how your cash flow has changed since the beginning of the year.
Prioritize Where Your Money Should Go
A natural next step after you review your budget is determining your greatest needs or the best usage of your money. Has your employment been affected by the pandemic? Prioritize your essentials: rent, food, debts… Make sure to check out our guide to local, state, and federal COVID-19 resources that can help if your job situation has been impacted.
For those who are able to save, spend, or invest, there are many ways you can use your funds. Here are a few ideas:
- Save. Financial experts recommend having enough emergency funds to cover 3-6 months of expenses, such as housing or food. Other good things to cover in your savings account: out-of-pocket medical expenses, gas, and more. If you don’t already have one, consider this Business Insider list of high-yield savings accounts.
- Pay down debts. Have sufficient savings? While it’s good to continue adding to your emergency funds, paying off credit cards and loans is also a wise way to use your money. Make sure to check with your lenders to see who is and who isn’t collecting interest right now – for example, interest is waived for federal student loans until September 30, 2020, so you might want to focus on credit card debts with high interest rates.
- Invest. You will certainly need to be careful if you choose to invest – the markets are always volatile, and the current situation is unprecedented. However, the value of investing now with long-term growth in mind is something to consider. If you’re a first-time investor, check out the LBCU financial education articles on investing.
- Donate or support small businesses. Nonprofit and charity organizations will inevitably see a rise in demand, so donations are more critical than ever. Small businesses are also suffering as people stay home or become unable to spend on anything other than essentials. Buying from small businesses can be a great way to help stimulate your local economy.
Plan for the Future
It may be hard to believe, but this pandemic will eventually end. If you’re able to save, pay down debt, or invest, you’ll be setting yourself up for a stronger financial future. Liberty Bay also has an online learning portal that is free to use for the entire community and offers advice and enrichment opportunities to help you learn more about personal finance. Keep your long-term financial goals in mind, remembering that when this situation ends, LBCU will still be here for you.
Need any additional help or tips on how to handle finances? Check out all the LBCU services available to get you through COVID-19. You can also get in touch with us at any time and one of our credit union experts will help you as soon as we can.