For millions of Americans, life has been turned upside down by social distancing, quarantines and business closures from the COVID-19 pandemic. If your finances are stretched thin, now’s the time to reset your budget and take steps to minimize some of the pandemic’s impact on your finances. Making changes in the following areas can help you get back on track:
Assess your income.
Review your current monthly income, including any money you receive through unemployment benefits and direct stimulus payments. Look for ways you might be able to increase your income—companies such as Amazon, CVS and Target are hiring thousands of employees to meet the increased demand the pandemic has placed on the retail and delivery service industries. Consider if a role with one of these organizations may be right for your situation.
Review your spending.
If you’re staying home, you might spend less on transportation and going out, but you might spend more on groceries and other essentials. Look for opportunities to reallocate money you used to spend on daily coffee, lunches out and commuter tolls to pay for the things you need at home. Try postponing large purchases and cut back on the nonessentials to make your budget stretch further.
Trim your bills.
Track your upcoming bills, including your mortgage or rent payments, auto loans, student loans, insurance payments and utility bills. Contact your lenders and utility providers to find out if they offer loan deferment or skip-a-payment programs for those affected by COVID-19. Here are some more ways to lower your recurring bills:
- Review auto and homeowners insurance policies for ways to save money. If you’re not driving because you’re staying home, ask your insurance provider about options for reducing your insurance premiums. Many auto insurance companies are offering refunds or premium credits between 15% and 25% through May.
- Reach out to utility providers about switching to a budget option or changing your services to reduce costs. Look for ways to save energy in your home to reduce utility bills.
- Cut back or temporarily pause TV streaming, music streaming or other services you don’t need. Cancel clubs and memberships if you’re not taking advantage of these services.
- If you own your home, look into options for refinancing your mortgage to a lower rate.
Use credit wisely.
Review your credit card account info and compare the following for each card: current interest rate, outstanding balance and minimum monthly payment. Prioritize making minimum payments on time and consider transferring balances to a lower-rate card to reduce interest payments. Using credit cards to cover monthly expenses can help you get by in a financial pinch, but you’ll risk charging up more debt that’s difficult to pay off in the long run. Try to reduce debt and avoid taking on new debt if possible.
Having an emergency fund can provide a financial cushion without relying on credit cards or cashing out retirement accounts to pay the bills. If you’ve already dipped into your savings, think about ways to slowly replenish your emergency savings over time. You might consider setting up small recurring transfers into your savings account so saving money happens automatically like any other monthly expense. Learn more about small ways to continue building your savings with Navy Federal Credit Union.
Need some assistance to create your new budget? Use budgeting tools and tips available from Navy Federal, and visit our COVID-19 Response page to learn more about the relief options we’re offering during this time.