How to Navigate Financial Stress from COVID-19
If you’re feeling stressed these days, know this: You’re not alone – particularly when it comes to finances. A lot of us are experiencing at least some worry over the impact that the COVID-19 pandemic will have on our financial situations. But by having a plan and proactively managing your finances, you can ease the uncertainties that fuel anxiety and stress.
Cause for Concern
Over the past several months, income changes and concerns about the overall economy have clearly affected purchasing habits: According to the U.S. Bureau of Economic Analysis, an agency of the commerce department, consumer spending fell by a record 13.6% in April 2020, eclipsing the previous largest-ever decline, a 6.9% change reported one month earlier.
Meanwhile a J.D. Power survey in April found that 72% of consumers say the COVID-19 crisis has hurt their financial situation, and 44% of Americans expect to use existing savings or emergency funds to pay for monthly living expenses if they can’t work.
That same J.D. Power survey asked people about their stress levels and found:
- 91% are somewhat or very worried about the impact of the crisis on their personal financial status
- 55% are somewhat stressed over their financial situation
- 27% – more than one in four – are very stressed
So, let’s talk about stress relief in the form of some simple, deliberate choices you can make and actions you can take.
Examine, Identify and Plan
- Take stock of your income and spending habits. This is your first step. Identify pain points, making note of where and when money causes you stress – and why. Timing of paychecks and bills can make you wince, for instance, if you have several utility payments due in a short span.
- Set up a budget and prioritize how you will spend and save. Focus on the basics of food, shelter and utilities. A useful guideline is the 50-30-20 budget. Once you have a good picture of your situation, household needs and spending habits, determine what you can change for the better.
- Be fully aware of any benefits you may be due. This includes paid work leave, sick leave, disability or unemployment payments. Additionally, pay attention to relief being offered through payment exceptions, postponements or other compensation during this time.
Declutter, Reduce and Pay Off
- Conduct regular check-ins and a thorough review of your bills and other expenses. Categorize them to ensure that you’ve got a good understanding of the money that’s coming in and going out of your household accounts. Automate utility payments to avoid late penalties and reduce the stress of remembering multiple due dates.
- Look for ways to reduce spending. Ideas include planning meals ahead of time, cooking at home, using everything in your cupboards and refrigerator and sticking to shopping lists. Consider canceling or suspending subscriptions to services that you don’t need or use often, like gym memberships, streaming services or meal kits.
- Pay off debt. This is key – even if you’re able to pay only the minimum on credit obligations so you can address basic needs or put money in savings. Develop a strategy for reducing and eliminating debts, and plan to avoid additional debt in the future. KeyBank’s Personal Debt Consolidation Calculator can point you toward possible loans to simplify debt reduction. You can also seek assistance from a financial advisor.
- Explore alternative sources of income. In addition to addressing expenses, this income – even in smaller amounts – can be a great help in achieving both short- and long-term financial goals. The U.S. Department of Labor’s CareerOneStop page is an excellent resource. Check for positions with essential businesses, such as grocery stores and delivery companies, or even opportunities to join the gig economy working from home.
Look to the Future
- Take care of yourself. Tend to your mental, physical and emotional health – exercise, make a daily schedule, allow yourself relaxation and leisure time. And the more you get hold of your financial situation, plus establish additional control, stability and predictability, the better prepared you’ll be for the turnaround to brighter days.
- Rebuild your emergency funds. It’s important to do this, when you can, even by just a few dollars at a time. Automate the process by directing a portion of any regular direct deposits – like paychecks – into a savings account, and then adjusting it based on your goals and achievements. You can also automate a monthly transfer from checking into savings. Or, through a program like KeyBank’s EasyUp®, transfer money from checking to savings every time you make a purchase with your debit card. When you receive unexpected funds or other income, look at how much you can put into savings once your basic needs are met.
All these tips can be summed up in a philosophy of daily awareness and open communication. Stay focused on your goals of specific savings amounts or debt payoffs, keep yourself honest and track your progress.