Economically speaking, 2020 has been a challenging time for many. And as we begin to set our sights on what a post-pandemic world might look like, our finances have more than likely felt the squeeze of these many changes. But there are many ways in which you can tackle these challenges head-on and set yourself up for a softer landing.
So what should you do to navigate the financial challenges of COVID-19?
One common struggle among many is the pain point of paying bills. Whether your paycheck is uncertain or a source of income was diminished or you’re supporting a friend or family member financially during the crisis, payments toward debts can be burdensome. So one way to navigate this potential hurdle is to consider refinancing and/or consolidating. Combining your debts can often lead to a lower, more manageable monthly payment and it can help you take advantage of a more desirable interest rate.
Not everyone’s circumstances have become as dire as a furlough or job loss—but that doesn’t mean you shouldn’t plan for that potentially happening in the future. As the economy recovers from the COVID-19 crisis, there may be ebbs and flows, so planning a just-in-case savings is a smart idea. Consider opening an interest-earning account to make it even more worth your while. The idea is to set aside enough to get you by for a paycheck or two should you need time to look for alternate employment.
So how about your shopping habits? Though your quarantine setup may be different depending on your job, your family and whether or not your household includes particularly vulnerable people, it’s a good idea to assume that another stay-at-home stint might be in your future. As such, make sure that you’re being smart with your necessities purchases—for example, groceries. Help reduce the likelihood you’ll waste money and food—include non-perishable items in your list and fresh foods that are easily frozen. Even better? Make your purchases on a rewards-earning credit card to earn cash back or gift cards for future purchases.
Watching a retirement savings account such as a 401(k) undergo the effects of a down stock market gives many the urge to cut and run, but, depending on your life circumstances, your age and your retirement plans, it might be a good idea to resist that urge. Though it might seem like a worthwhile backup source of funds, leaving these economically impacted accounts alone long enough to recover, rather than withdrawing early and incurring penalty fees, will help ensure you maximize their lifetime value.One great step to take toward working with a community-focused banking provider is joining a credit union. Find out how the Sioux Falls Fed team can add a local touch and genuine care to your banking experience—become a member.