Well here we are. It’s April of 2020, many of us have been holed up inside our homes for weeks, and there’s no guarantee that we’ll be free to resume our regular lives any time soon. Jobless claims in the United States have spiked over the past few weeks, as our COVID-19 quarantines force businesses to close their doors. For many people, it’s a time of unprecedented uncertainty.
It’s also the ideal time to do a serious evaluation of your personal finances.
In this article, we’ll walk you through the things you can do right now to weather the storm, and hopefully come out of this quarantine better than ever.
Start With Your Monthly Budget
If you don’t have a monthly budget, now’s a good time to start one. If you do have a budget, take some time to reevaluate things and make sure it’s still accurate. There are plenty of apps to help you budget; we’re big fans of Mint, for example. But you don’t need anything fancy to create a functional budget. Here’s a quick and dirty way to set your monthly budget:
- Find your total average monthly income. This is going to be the number you need to account for with the rest of your budget.
- Determine your monthly spend on housing, food, utilities, and other needs. And we really do mean needs – if your food budget is set for eating at your favorite restaurant every night, you’re doing it wrong.
- Subtract your needs total from your monthly income. If you’re making $2,000 a month, and you spend $1,200 on needs, you’ll have $800 left to budget.
- Divide that remainder between wants and savings. If you’re new to this, try a 50/50 split, then adjust from there to find a comfortable lifestyle while still saving for your future.
- Set your numbers and stick to them. Give it a month living on your new budget and see how it feels. What else do you have to do right now anyway?
That’s a super-simple budget strategy, but it will be the backbone of staying on top of your finances during this crazy quarantine. Be sure to set everything according to your current income—it doesn’t matter what you were making before the world went into lockdown. If you’re currently relying on unemployment benefits and government relief checks, that’s what you plan your budget around.
Reevaluate Your Subscriptions and Services
Okay sure we’re all currently in a race to see who can make it through to the endscreen of Netflix right now, but what subscription services are you paying for and not using? Can you put your gym membership on hold? Are you still watching HBO now that Game of Thrones is over? If you’re paying for a service and not using it, you’re throwing money away.
That being said, there’s certainly a case to be made for continuing to support small or independently owned businesses with your monthly membership fees if you can afford to do so.
File for Unemployment As Soon as You Can
Weekly unemployment claims are at an all-time high as millions of Americans are being let go by employers looking to cut costs. If you’re eligible, you should file for unemployment as soon as possible in order to start replenishing lost wages. Unemployment benefits have been expanded as part of the federal relief package, so you should double-check your eligibility at the Department of Labor’s Website. Even if you’ve never been eligible for unemployment benefits before, you may be now.
If you lose your job at any time during this public health crisis, filing for unemployment should be one of the first things you do.
Be Smart About Stimulus Payments
You may have heard about the $1,200 check most US citizens will be receiving in the coming weeks. This stimulus payment is going out to individuals who earned up to $75,000 in 2019, with adjusted amounts for married couples and taxpayers who filed as head of household. It is vital that you consider this one-time payment as part of your regular income, and apply it to your carefully considered budget. Use it on food, housing, utilities, or other necessities, and save every penny leftover. No one knows how long this quarantine will keep people out of work, and no further stimulus payments have been announced. Plan as if that $1,200 has to stretch a long way.
Take Advantage of Deferred Tax Deadlines
April 15 is well known as the annual tax return deadline, but even that has changed in the face of the COVID-19 pandemic. Taxes are now due July 15. If you’ve recently lost income, this deferment could be a lifesaver. We suggest you still get your paperwork together as soon as possible, but you can wait on making your payments until your finances are in better shape.
Speak With A Financial Planner
Everyone’s financial situation is unique, and the best way to come up with a plan is to meet with a professional who can help tailor things to fit your needs. A qualified financial advisor will help you sort out your approach to weathering this storm, and for finding financial freedom once things get back to normal.