While some people appear cautiously optimistic about the nation’s economic future, spending more than a few minutes watching the 24/7 news feed can leave you less than convinced.
It was only a few months ago that you were crushing debt and planning your summer vacation, but the COVID-19 pandemic stopped you in your tracks. Now you’re wondering if there’s anything you can do to regain the momentum you had at the start of the year.
Here are five smart money moves you can make during uncertain times to improve your financial situation starting today.
1. Revise your budget
Whether your household income has decreased or not, now is a good time to take another look at your budget. Comparing income to expenses might make it clear where you need to cut back so you can focus on necessities, such as rent, groceries, and transportation. If needed, contact your creditors about payment deferral options to help reduce financial pressure on your household.
This is also a great time to decide if the budget you’re using works for your situation. For example, if you’re using a zero-sum budget, a 50/20/30 budget might be preferable.
2. Hold tight to your financial goals
Were you working on paying off credit card debt or saving for another financial goal before the pandemic? Don’t stop. Money may need to be reallocated based on changes in income, but don’t completely abandon your savings goals. This might mean saving 1% of your income instead of 5%. If you have multiple financial goals, adding money to your emergency savings account should be a top priority.
3. Embrace technology
Social distancing has forced us to not only interact differently with people but also with our money. For example, many people now prefer to use contactless mobile pay instead of handling cash. Financial institutions are encouraging members to use online and mobile banking to pay bills, deposit checks, and manage their accounts from the comfort of their homes. Using technology to help manage your finances is a smart money move.
4. Keep making 401(k) or 403(b) contributions
Don’t let market volatility deter you from staying the financial course. If you already have a sizeable emergency savings account balance, your income hasn’t changed, and retirement is at least ten years away, holding steady may be the best course for you. If you decide to make early withdrawals, be prepared to pay the applicable penalties and fees.
While you might be tempted to reduce contributions to your retirement plan and redirect the money to your bank account, you might find that’s not the best long-term option for you. Especially if you’re missing out on your employer match, i.e., free money.
5. Learn and plan
Take advantage of resources available to help you manage money in good times and bad. Use this time to explore calculators that help you plan for the future. From making a budget to setting a savings goal, run the numbers. You’ll also find articles about managing your money and keeping it safe right here on our blog.
When it feels as if you’re on a financial roller coaster with no end in sight, applying these tips allows you to take hold of the control panel and have a say in how the ride ends.