Managing During COVID-19: 3 Essential Steps to Maintain Your Financial Health
Living under the restrictions of a quarantine certainly isn’t easy. And this "new normal" isn’t guaranteed to be easy on finances, either. The effects of the COVID-19 pandemic have been blamed for lost income, lost work and increased expenses for Americans from coast to coast.
But there are measures you can and should take now to protect yourself from the worst effects of this crisis. Being aware of where your finances may need extra TLC, and the new resources you can use to do that, will go a long way toward preserving your financial health at this unique time.
Bolster your finances for the long haul by addressing three factors that largely determine your financial wellness: income, expenses and savings. Addressing these three areas promptly, while also making use of the newest resources available, can help you to manage the effects of the current crisis effectively.
Protect and Build Income
Your first step is preserving and securing any and all sources of income. If you’ve lost your job, that means applying for unemployment benefits as soon as possible – even if you don’t think you are eligible. Thanks to the economic relief measures put in place by the recently passed CARES Act, many more workers are now eligible to receive these benefits. The list now includes part-time workers, as well as those who were quarantined, furloughed or had to stop working to care for a family member. And, if your former employer is willing to provide extended benefits or other helpful resources, be sure to take advantage of those supports too.
If you must find an additional source of income, one possibility may be applying for work with one of the businesses that needs extra help now. Grocery stores, home improvement stores, food delivery services and online marketplaces are among the enterprises that may be hiring. You can also check out the Steady app, which lets users quickly find listings for part-time and hourly jobs – like food delivery and work from home opportunities.
If you feel it’s necessary to take on additional debt to cover your expenses, remember to research the many lending options that are available to you and don’t just jump on the first opportunities you see. You’ll want to avoid payday loans in favor of loan options from banks, local credit unions and other institutions you’re affiliated with.
Another option, though not necessarily ideal, may be borrowing against your retirement account. Under the new stimulus program, you may be able to borrow a higher proportion of your balance, and you’ll have an extra year to repay the loan.
Scrutinize Your Expenses
Amid the uncertainty about how long this economic crisis will last, you’ll want to take a closer look at your expenses. Consider all of your regular expenses, like housing, loans and credit card debt, and determine which expenses can be cut, reduced or delayed. Canceling subscription-based or streaming services you don’t really use or need can be a fast, relatively painless way to cut some expenses. When it comes to everyday purchases, consider whether the purchase is critical for the near term or if it’s something that can be delayed.
Look into the mortgage assistance programs currently available through state, local and federal agencies, if you’re having trouble paying your mortgage. A good place to start researching these programs is the Federal Housing Finance Agency.
There may also be help available when it comes to paying off outstanding debt. During this unprecedented time, many creditors (including KeyBank) are offering various borrower assistance programs for clients impacted by the coronavirus. You may also want to contact credit card companies and other creditors to ask about the options available to you to see if those options can help your funds to go further.
For similar reasons, you’ll want to sock away any extra money that’s left over after paying your bills. Create an emergency fund that will provide security, should the crisis continue for a long time or if you encounter unexpected expenses.
Depending on your eligibility, one source of funds you can use to fuel your savings is the government stimulus payment that will be distributed resulting from the CARES Act. If you can afford to use this money to help shore up your savings, that will provide more security and flexibility.
Having these emergency funds is a much better option than dipping into your retirement accounts at this uncertain time and during a bear market. While withdrawal penalties are likely to be waived in the event of this hardship, it’s best to avoid selling off investments that will essentially lock in current market losses.
If you’re already drawing on your retirement funds, you may want to take advantage of the CARES Act rule that eliminates the need to take a required minimum distribution in 2020. That may enable you to leave your investments in place this year so they’ll have a chance to rebound with the market.
These solutions represent a range of quick changes you can make now to help protect your finances during the current crisis. For additional assistance, schedule an appointment with a personal banker at your local KeyBank branch, or call us at 1-800-KEY2YOU (1-800-539-2968). For clients using a TDD/TTY device, please call 1-800-539-8336.