That toilet paper stockpile won’t save you if you don’t have enough money to pay your mortgage.
7 Personal Finance Tips to Prepare for the Coronavirus Economic Fallout
Just this week, a potential client of mine postponed a phone interview because they had to cancel a huge conference due to coronavirus concerns. I’ve also watched colleagues lose freelance clients due to COVID-19 budget concerns. Just this morning, I heard of a company forced to lay off one-third of its workforce for the same reason.
Even though stock market plunges dominate the news nowadays, you’ve probably seen signs of impending economic troubles within your own circle of friends and peers. We all hope the economic impact from COVID-19 will be minimal and short-lived, but what if it isn’t? Will you be okay financially?
Click or swipe to learn 7 tips for injecting a booster shot to your money management practices.
1. Pad your savings
Don’t stockpile food, toilet paper and bottled water while ignoring your savings account. Ideally, you should have at least six months of savings to live on in case you lose your income, but many people don’t have enough to get by for even one month without a salary.
Deposit as much as you can in savings now, even if you can’t meet that six-months recommendation. If you never have to use that money, you’ll come out ahead. And if you’re hit financially by COVID-19 fallout, you’ll have extra money to pay the rent, mortgage, car payment and other expenses.
2. Have more than one source of income
When you earn a good salary, having a second job or a second source of income – even if it’s only a couple of hundred dollars a month – probably never crosses your mind. But it’s always smart to have a second income trickle. That’s because with an additional income source, if you lose your full-time job unexpectedly, you still have some money coming in to help pay the bills.
What skill can you use to earn extra money? Yard work? Pet sitting? Selling a product? Online tutoring? Choose a side hustle you love, and the task won’t seem like work at all.
3. Pay off credit card debt
You know that credit card balance you carry because the interest isn’t all that much every month? Pay it off as quickly as you can. The last thing you need in an economic downturn are a bunch of monthly credit card payments devouring your paycheck.
Even if you must curtail dining out, cancel subscriptions or cut cable TV, it’s wise to get rid of credit card debt so monthly bills are lower and easier to pay if your financial situation gets bumpy.
4. Pay off small debts, too
Got a $200 medical bill here and a $60 credit card balance there? Just pay it all off now while you have the money. That way, if you lose part of your income or your job due to COVID-19, you don’t have to worry about past-due payments or inability to pay, factors that can damage your credit score.
5. Get a jump on monthly payments
If you have extra money, pay ahead now on the mortgage, car payment or other monthly payments just in case COVID-19 affects your income later. Paying ahead is a good practice anyway, since there are plenty of life and work events besides the coronavirus that could affect your income at any time in life.
6. Lower monthly expenses
If your income takes a hit due to COVID-19, you’ll want your monthly expenses to be low, so your money goes further. Check out LowerMyBills.com, which helps consumers find ways to research, compare and lower monthly bills.
Switch to a cheaper cell phone plan. Ask your insurance agent if you can safely lower auto and homeowner’s insurance premiums. Pause streaming services or cut cable services. All those costs add up, and you don’t need more monthly payments if times get tight.
7. Live more frugally
We all love dining out, DoorDash, movies and booking a Lyft to meet friends. And you may enjoy massages, pedicures or getting your nails done. But keep in mind that perfect nails and a tummy full of takeout won’t pay the rent during an economic downturn.
When signs point to a potentially troubled economy, reign in spending and squirrel away money instead. You don’t have to deprive yourself of everything, but cook more meals at home, space out time between haircut appointments or find other ways to cut daily expenses.
This article by Deb Hipp was originally published on Debt.com.
Published by Debt.com, LLC