By Josh Deakin
Over the last six months, the growing pandemic has given rise to many financial-related stressors that we haven’t had to think about before. Financial burdens during this time can be quite taxing and can give way to panic quickly. It’s invaluable in recent times to take a step back and evaluate problems as they arise instead of letting your imagination run wild.
Do: Consider Refinancing
Refinancing a home may seem like a risky task but during a time of nationwide economic hardship, interest rates decrease. By refinancing your home with a lower interest rate, you could save a substantial amount of money month to month to help with other household necessities. If you do decide to go this route, think carefully and be sure to do the math. Refinancing does come with a cost but it could be worth it. Consider consulting with a financial advisor before making any permanent decisions.
Don’t: Drop Insurance
You see this phrase everywhere and its meaning is perhaps more important now than ever: “Don’t put money over health.” In times of financial hardship, some people think dropping their insurance could be a quick way to save money. But safety and security should be a top priority. If you did drop your health insurance to save a little money during the pandemic, the cost of an ordinary doctor’s visit could break the bank. And if you’re worried about the cost of a doctor’s visit, you’re more likely not to go which may put you and your family at greater risk for COVID-19 and other illnesses and health problems.
In the grand scheme of things, your monthly insurance premium may not only save you thousands of dollars in medical-related bills, but will also help keep you safe and healthy during this time. A co-pay will always be a smaller financial burden than a full-price visit.
Do: Create a Budget
A budget can be your best friend in times like this. It’s very important to sit down and figure out what you can afford to allocate money towards. But the real test isn’t making a budget, rather, it’s sticking to it. With a budget comes sacrifices and curbing your spending on unnecessary items. This could be something small like making coffee at home instead of going to Starbucks. Or it could be much larger like putting off a family vacation that had been planned.
A budget is a necessary guide to assist you with spending and saving. Many people find comfort in knowing what they will be spending their next paycheck on and how much of it will be retained in a savings account. There are many apps for your phone that are easy to use and can assist you with your budget creation. If you are having trouble on where to start, consider one of these options. It’ll make the process much easier and perhaps even a little fun.
Utilize the budget to build your savings. “Setup automatic deposit to your savings when you get paid. Your goal is to put aside six months of expenses into a savings account,” said Mike Grow, Marketing Director for Maine Savings Federal Credit Union. “Keeping your debt-to-income low will open up more options when you look to buy a house, car or other financial purchases.”
Don’t: Fall For a Scam
Scams are abundant in today’s age. From phishing emails to phone calls seeking to “assist you with your finances,” scammers are on the hunt to prey on people’s anxiety over the uncertainty that COVID-19 brings. Be on the lookout for fake versions of websites hosting “incredible deals.” These deals are designed to look unbelievable to get you to put your credit card information into their website.
When shopping online, try to utilize pay services that help assist you in providing more security during transactions. PayPal is a wonderful tool for this. Using a third party to hold your banking information provides a security screen to the actual website.
The government is also warning people to be wary of any unapproved “miracle drug” that is being branded as a potential treatment to COVID-19. This scam is the oldest trick in the book, dating back to early traveling salesmen selling the miracle elixir for hair loss. Don’t be fooled by purchasing unapproved products that may be more harmful than helpful. Always consult your doctor before trying a new medication.
Do: Call Lenders
If you are concerned about being able to make a payment to a lender, don’t be afraid to call them and see what they’re offering for assistance. “Only defer payments if it is necessary,” said Grow. “If you have to defer payments, make sure you are aware of the costs over the long term.”
Speak with your lender and make sure you have all of the information needed to make your educated decision when it comes to payment assistance. Take note of if the lender will require an extra fee or if there will be any penalties for deferment.
It’s easy to panic during a pandemic. The anxiety surrounding potential job loss and financial hardship may be looming over your head like a storm cloud, but a pandemic doesn’t guarantee either. Be sure to remain as calm as possible and refrain from selling off assets to acquire extra cash just in case. Investments can take time to fully mature and selling them before the full maturity could result in an ultimate loss.
This also speaks for stock market investments. The market ebbs and flows on a regular basis and just because a stock drops today does not mean it will stay that way for long. The economy will recover in time and when it does your investments will return their value.
While there’s lots of talk of a second stimulus check and various government-related tax breaks to help out the population, it’s important to remember these aids will not be available forever. “Do not rely on the financial assistance the government has offered during these times,” said Grow. “These programs are a short-term solution, so plan ahead. Some unemployment income has been higher than working income but make sure you look at your long-term needs and take steps to ensure you have a reliable source of income in the future.”
There are many options available to maintain a healthy financial portfolio. If you are concerned about your finances, it is highly recommended to seek out an advisor to guide you on your journey.