For more than twenty million Americans, COVID-19 caused financial insecurity by way of unemployment. Even those who were fortunate enough to hold on to their jobs still felt the strain. Utility bills rose thanks to extended summer breaks from school, homes becoming remote offices, and the presence of more people home for more hours of the day watching TV, using the internet, and using all the lights, appliances, and electronics. Bills were delayed, new payment plans set up, and debt accrued as incomes were furloughed, eliminated, or otherwise impacted. For some, credit cards were the only answer and balances climbed with all the delivery fees from keeping families fed and safe at home added up.
That being said, it is okay if your budget changed during the quarantine. However, now that you are trying to get back to some sense of normalcy, how can you get your finances back on track?
Here are a few tips to put you back on the path to financial peace.
Assess Your Current Financial Situation
Has your income changed? How have you managed your debt during the quarantine? Are there any expenses you sacrificed during quarantine that you would like to bring back? Now is the time to look at the big picture of your finances and figure out what you have (income), what you need (expenses), and what you want (financial goals).
Even if your income is the same now as it was before quarantine, you want to account for any temporary changes that occurred during that time. Did you have additional income from a stimulus check or logging more hours at your side hustle? Were you furloughed or did you work fewer hours than your normal schedule provides? Having an accurate accounting of the money you have now will provide you with an accurate snapshot to base your budget on.
Once you know how much money you have available and what will be coming in after quarantine, it is time to look at your debt and expenses. While your expenses may not have changed too much, your debt may be higher if you had to rely on credit to make ends meet during the quarantine. Fortunately, many credit card companies and loan providers are offering low or zero-interest right now due to the financial crisis caused by COVID-19. Whether you had to delay payments, set up a new payment plan, or if you just need to get started making payments on the debt you accrued over the last few months, consider transferring any interest-collecting balances to a zero-interest account. This will give you a better opportunity to pay down your debt with affordable payments without having to worry about interest driving the balance up.
You know what you have, you know what you need, and now you need to set financial goals. If you had to sacrifice your music streaming subscription during quarantine or if you canceled that gym membership, your financial goals may be as simple as adding back some of the luxuries you gave up. However, if you tapped into your emergency savings account to make ends meet, or if you did not have an emergency savings account and had to take on debt instead, a great financial goal would be building up that account to provide financial security for any future needs. Whatever your financial goals, making them realistic with a dollar amount and plan to reach them is key to success.
Re-Prioritize Your Budget
You did the groundwork above. Now, it is time to review your budget and re-prioritize. Focus on saving and paying off debt. While you may be eager to dine out, go shopping, and get out of the house, try to limit your spending for now. Give yourself a chance to recover from any financial strain you experienced because of quarantine.
Host a backyard cookout for your friends or meet in a public park for a picnic and games. You can enjoy life outside of quarantine without having to spend a lot of money. Look for ways to save on bills, groceries, and other expenses. Did you know that you can renegotiate your bills? For many services like television, internet, and cell phones, you may be able to negotiate a lower bill. Check out this article for tips on how to negotiate with your service providers.
As you shift your budget to focus on saving and debt repayment, make sure you get the most for your effort. Look for a high-interest account to build your emergency savings account, so you will earn money on what you contribute. With debt payments, make sure to prioritize paying off the debts with the higher interest rates to save yourself the most money.
Find Extra Money
If you turned to a side hustle to cover your bills during quarantine, avoid being too quick to let that income opportunity go. Even if you are back to work full-time, holding onto that side hustle is a great way to pay down debt and rebuild your savings without having to sacrifice spending. Even if you only work an extra hour or two each week, every extra penny you earn is one penny closer to reaching your financial goals.
You may also find extra money in refunds. Did you pay for services that you were unable to use because of quarantine? If you paid for a gym membership, tanning salons, or other subscription or monthly-enrollment services that were closed or you did not feel safe using during the height of the pandemic, seek a refund. The COVID-19 pandemic was unexpected, unprecedented, and for many businesses, outside the scope of refund policies. Contact your service provider to inquire about a refund for any unused services to ensure you do not leave extra money behind.
Finding Sure Financial Footing Once Again
Remember, the quarantine was an unprecedented time of emergent circumstances. Just like the economy will not recover overnight, it may take some time to get your finances back where you want them to be. Be patient and committed to your goals.