Washing your hands, wearing a mask and practicing social distancing can help protect you from the coronavirus — but it won’t necessarily do much to protect your bank balance.
The global pandemic has slowed the economy and put millions out of work. If you’re among those concerned about your finances along with your physical health, consider these tips from Knowledge of Financial Health, or KOFE, a leading financial education provider and Colonial Life partner.
- If your income has been affected, let your bank and credit card companies know.
Your creditors likely recognize many people are dealing with reduced income caused by job loss or reduced hours. It’s best to contact them if you expect to have trouble making payments. They may be able to set up temporary reductions or holds on your payments.
And by the way, don’t ignore notifications from your financial providers. Many are offering new online and mobile services to make interacting with them safer and easier.
- Avoid panic purchasing.
It’s tempting to think you should stock up while you can, but that buying behavior is what caused months of bare shelves where the toilet paper used to be earlier this year. You’re also likely to rack up credit card debt buying items you may not need.
- Pay off your credit card debt.
Speaking of credit cards, taking on more of this potentially expensive debt in an unstable economy is never a good idea. Instead of creating higher bills that eat up more of your budget, pay that debt down as much as possible. Pay those with the highest interest rates first. If you owe more than $10,000, look into options for debt consolidation or contact a credit counselor for professional guidance.
- Cut back spending to build savings and avoid new debt.
Review your budget to find expenses you could cut back — or cut out. You may not be dining out much these days, but if you’re getting a lot of takeout or using delivery services, you could be spending just as much. And maybe you don’t need 3 streaming services (just sayin’). In a normal economy, experts advise having 3 to 6 months’ worth of expenses in the bank. In today’s environment, expand your safety net by shooting for 6 to 12 months.
- Use some stuck-at-home time to build financial literacy.
If you find yourself with more time on your hands while usual activities are on hold, use it to improve your financial knowledge. Learn how to budget better, how to begin investing, and smarter strategies for managing debt. Look for free resources online, such as programs offered by your local library or other organizations.