From furloughed positions and job loss to decreased hours and a decline in business activities, the coronavirus outbreak has caused over 75 percent of individuals to feel significantly more nervous about their personal finances and financial future, according to a recent study.
With job stability becoming more scarce, many are reaching into their emergency fund and other savings to make ends meet right now. While financial hardships are impacting a large majority of the population, properly managing finances may help you stay afloat during these times.
Avoid Accumulating More Debt
Almost 80 percent of American’s carry some kind of debt and 37 percent feel they have too much debt. While income for many right now is significantly decreased, it may seem easy to charge purchases to credit cards and pay off when a source of income returns.
Avoid doing this unless it is absolutely necessary. Small purchases on credit cards can quickly add up and lead to a maxed-out account. This, in turn, increases monthly minimum payments because of the high-interest rates normally charged by credit card companies. Missing these minimum payments can cause fees, a decline in your credit score and raised interest rates in the future.
Charging all purchases may seem like a way to maintain a higher cash balance in your bank account, but ultimately it will end up costing you more.
Budget, Budget, Budget
Whether you’ve lost a job or experienced a pay cut, now is an essential time to realistically address what source of income you have and what essentials you need to be paying. Budgeting is always a good way to manage finances, as it allows you to create a spending plan and allocate your money appropriately.
First, take a look at your current income. If you do not have an income, what emergency funds do you have available? What items can you afford to sell that will allow you to stockpile money rather than things you don’t need? Sites like Poshmark and Powell’s allow you to sell things like books and clothes safely and securely, so you can declutter and earn money at the same time.
After you have addressed the income or money you currently have, create a new budget or redo your old one. Assess what bills and expenses you have for the month (i.e. rent, phone, car payment, student loans, groceries) and what you have left of your cash after those are paid. Additionally, pause all fun money and redirect money that you may have previously allocated to restaurants and entertainment, towards necessities and savings.
Online tools like Quicken are available to help establish a budget and get an idea of how you should be distributing your money. There are also free apps like EveryDollar and Mint that allow users to track their budget, income and day-to-day spending.
Job Searching
Unemployment claims are increasing faster than we have seen in the U.S. economy ever before. If you have lost your job during this crisis, try to stay positive and patient as you start looking for a new job. Utilize your extra time at home to strengthen your LinkedIn profile, build out your portfolio and update your resume; remember to include specific measurables that will make you stand out from other applicants.
Some businesses are continuing their hiring process, just in a different manner than before, as they turn to platforms like FaceTime, Google Hangouts and Zoom to conduct interviews and connect with possible candidates. Brushing up on small talk and pleasantries can ease awkwardness over the phone and help build rapport with the interviewer. Ultimately, remember to be patient and ready to make the most out of any job opportunity that may come your way.
Personal finances are especially important to effectively manage during a crisis. If you have experienced hardship during these times, many resources are available to help those in need. Additionally, make sure to reach out to companies when you are struggling to make payments, as many are willing to help.
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