Build up your savings, pay down outstanding debts, and take advantage of changes in the market.

By Caroline Biggs
May 27, 2020
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The COVID-19 pandemic has brought financial worry to many Americans. Not only are unemployment rates in the country at an all-time high, but the future of the economy remains uncertain. "Even if you haven't seen a change to your job or compensation, the customers your business serves may be victims of the economic downturn and, therefore, impacting how they do business with you," says Priya Malani, founder and CEO of Stash Wealth. "Many employees with sales-based, entertainment, and marketing roles are worried their commissions won't return until mid 2021."

Fortunately, Malani says there are several ways to stay on top of your finances when facing the threats of economic uncertainty. "If your compensation has been reduced, being able to pay bills, maintain savings, and manage outstanding debt is a big challenge," she says. "If you don't have an emergency fund (with enough to cover three months' worth of fixed expenses), the pandemic should be a strong reminder of how important it is to have one."

Pay down your debt.

Make no mistake about it: Malani says paying down personal debt is one of the most important steps you can take towards a more solid financial future. "Consider using any extra cash that you might have been saving up to pay off credit cards and any other outstanding debt," she says. "The sooner you can get debt out of the way, the faster you can start using your money towards fun financial goals like travel and upgrading your lifestyle."

Refinance outstanding debts.

If you have student loans, personal loans, or credit card debt, Malani says the pandemic is the right time to refinance. "With interest rates dropping, it may be a great time to refinance and lock in lower interest rates, potentially reducing your current monthly payments," she says. "However, as part of the stimulus package, certain student loan providers are allowing you to pause payments with no penalty (and no interest accruing), so it may make sense to wait until your payments resume before refinancing."

Build up your savings.

If your emergency fund is established and your debt is under control, Malani says you may want to consider increasing contributions to your 401(k) or investment account. "When the stock market is down, every dollar you invest does more for you," she explains. "Think of it like going to [your favorite store] when everything's on sale—your money goes a lot further."

Pause payments.

If you are experiencing a time of financial hardship, such as unemployment or underemployment, Malani says you may be eligible to pause payments on your mortgage or rent, as well as outstanding debts and certain utilities. "Call your providers and discuss your options with them," she advises. "A little break in payments can go a long way during a financial crisis."

Take advantage of government assistance.

Even if you don't qualify for traditional unemployment benefits or other forms of governmental assistance, Malani says the federal coronavirus stimulus package could still provide you with some financial help. "The stimulus package offers a lot of benefits for entrepreneurs and freelancers whose income may have been dramatically reduced given the pandemic," she says. "There are expanded unemployment benefits, as well as grants and loans available that can help small businesses make it through the economic slowdown—so take some time to research all of your options."

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