The news about the economy is unsettling right now.
With so much uncertainty, what can you do to protect your finances and prepare for the months to come? Consider these ideas to shore up your finances, stay afloat, and set yourself up for success after the crisis.
Saving money when you feel broke is hard, but it’s possible. It’s important to take control of your finances by carefully analyzing your spending and looking for areas your household is potentially wasting money on.
If you have a budget, your task is easier. All you need to do is review your spending categories to find where you can cut back on your expenses. If you don’t have a budget, now is the time to create one. Review your budget the same way a business person would. Analyze your income and debt responsibilities, such as a mortgage or student loans, to determine your personal long-term debt ratio. Examining your income versus liabilities can give you a clearer picture of how aggressively you should cut back on non-essential spending.
The reason you want to tighten up your spending is so you can allocate the money towards savings. You’ll want to set aside the funds you’ve saved into an emergency fund to cover your expenses for a few months, just in case you lose your job or your hours get cut back. You can always turn to unemployment benefits should things go wrong, but having a financial cushion set aside to ensure you can meet your responsibilities for three to six months can help you weather the crisis. Plus, you’ll rest easier knowing you’re covered for the short-term.
Shop around for a high-yield savings account where you can park the money you set aside for a rainy day. The highest-earning rates usually come from online-only banks. There’s no need to be wary; online banks are FDIC insured, so your money is safe. Because they don’t have the expensive overhead of physical brick and mortar locations, they can afford to charge lower fees and pay higher interest on your savings.
Accessing your money from an online bank is no more difficult than it would be from a local bank branch. Your online bank will provide you with an ATM card so you can make withdrawals. Most banks have partnerships with ATM networks, so you can access certain cash machines for free. To deposit money to your online bank, you can send an electronic transfer from your existing account for free.
If you’re struggling with growing your savings, you may need to pick up a side job for extra income. Delivery drivers and grocery store workers are busier than ever. You can sign up for some of the gig worker job platforms such as Instacart, Uber Eats, Postmates, or DoorDash to deliver food and groceries to customers. Or pick up part-time work at a supermarket near you. Nowadays you can even make money by filling out surveys and playing certain games on your phone.
While you consider your work options, it may be a good idea to polish up your resume and network with colleagues, just in case you get laid off or put on leave. The employment market may not be the same when the COVID-19 pandemic is over. Your position may no longer be available when things get moving again. Be open to a career detour to leverage your existing skills and use them for other types of work.
Consider the following examples of how you can detour or pivot your talents and experience to another field. If you were a taxi driver or Uber driver, you can switch to work as a delivery driver for UPS, FedEx, or Amazon. If you worked in IT for a bank, you may be able to use your computer skills to work in a hospital or medical clinic’s electronic records department.
If you’re dissatisfied with your current job and feel like the potential to earn more is capped out, perhaps now is the time to pick up some training or expand your skills in a field you’re more interested in. There are plenty of online education tools available. You can take advantage of your spare time to sharpen your skills for the future. Some examples of online training platforms worth checking out are Coursera, Udemy, and Skillshare. You can learn everything from web design to Microsoft Excel to finance!
Financial austerity is probably the last thing you want to face right now, but it’s essential for your success. It’s all too easy to feel powerless about everything that’s going on and get into a negative mindset regarding finances. A change in attitude is sometimes all that’s needed — worry less and act more. Find ways to make cutting back on expenses fun, grow your savings, and take steps towards improving your career possibilities so you’re ready to transition without too much downtime if and when you need to.