Guest Post by Erin Ellis
The COVID-19 pandemic has touched nearly every facet of our lives, from how we work and learn, to the ways we shop and spend time with our loved ones. Above all else though, the pandemic has shaken Americans’ financial security.
According to the U.S. Department of Labor, over 55 million people have filed for unemployment since the beginning of March. While some of these folks are back to work, others may have months ahead of them until they can find a stable income again.
Whatever your situation during this unpredictable time, there are a few things you can do now to ease your mind, begin to move forward, and ultimately recover from this crisis.
It’s important to note at the offset that if you’ve been laid off, furloughed, or lost hours or income over the past few months, you’re far from alone. Millions of people globally are also grappling with financial hardship.
Although it is difficult to not let the uncertainty and strain of your financial situation weigh on you, try to focus on accepting it. The sooner you come to terms with your new reality, the sooner you can be in the right headspace to create a game plan and move forward with recovery. But also, try not to be too hard on yourself. As we all know, we’re living in unprecedented times, and no one could foresee how this year would unfold.
Whatever your situation is, if you find yourself in dire straits, get back to the basics. First, take stock of your income and savings. If you’ve been laid off, how much will your unemployment benefits net? If your hours are reduced, what is your new weekly and monthly income? And how much do you have in savings to fall back on? Keep these numbers in mind.
Next, use these numbers to reevaluate your budget and determine what you need to spend, what you can skip, and where you can cut corners each month. For example, groceries and toiletries are items you absolutely need, but you can be strategic about how you shop for them. Mortgage or rent payments, utility bills, and car payments most likely need to be paid, unless there’s a moratorium on bill collection, in which case you can skip these payments temporarily.
You should also call your creditors to make arrangements regarding your payments. This helps in two ways: 1) You might be able to arrange a lower payment or later payment date and 2) You are protecting your credit and service by having an agreed-upon payment arrangement.
Your budget on takeout, Netflix, and shopping, should be significantly reduced, if not cut altogether.
Once you’ve determined what you need to spend each month, make every dollar allocated towards these necessities count. That means being mindful of what items are on sale at the grocery store, shopping wholesale at Costco or Sam’s Club, clipping coupons (Yes, those mile-long receipts at CVS can save you a ton!), and thrifting whenever possible.
Once you have your financial house in order, work on getting back on your feet. If you’ve been laid off, let your entire network know you’re in the market for a new job on your social media platforms, especially Facebook and LinkedIn.
Refresh your resume and set up virtual networking meetings with potential new employers. If you’ve been furloughed or have reduced hours, still reach out to your network – you never know what odd job or part-time opportunity could earn you some extra cash in the meantime.
Most importantly, be open to taking a position that’s outside of your wheelhouse. While it may not be your dream job, it will help you get back on your feet.
Yes, we all know that even the best-laid plans can go awry, but when it comes to your finances, you can never be too prepared. Factors outside of your control, like a stock market crash or a global pandemic, can occur at any time. While you may not find yourself on solid financial footing in the near term, once you do, it’s important to have a plan for next time — because there will be one.
Off the bat, you can start to build a rainy day fund by opening a high-interest savings account, setting up automatic transfers from your checking account each month, and adopting a low-spend lifestyle so you can put extra money away. Also, know who you can lean on, like a spouse, parent or friend, if push comes to shove.
While financial recovery may seem like a daunting task, you’re far from alone in this journey. Millions of people around the world are also grappling with the fallout — both physically and financially — of COVID-19. Although the path to financial recovery is not easy, by getting back to budgeting basics, stretching your dollar, and leaning on your network, you’ll be on your way to solid ground. And when crisis strikes again — which, inevitably, it will — you’ll be prepared with a rock-solid plan.
Erin Ellis is a Financial Educator and Accredited Financial Counselor at Philadelphia Federal Credit Union (PFCU), one of the top five credit unions in the Greater Philadelphia area. Her chief responsibility is to give members the tools and knowledge they need to better manage their money and achieve their financial goals. In this role, she is responsible for creating PFCU’s financial education curriculum, providing one-on-one counseling with members, and presenting seminars on various personal finance topics, including, budgeting, saving money, credit, identity theft, and homebuying to PFCU members and a wide network of social services organizations throughout the Philadelphia region.