So, we’ve all been sent home to stay six feet apart from everyone – and you just found out you have been furloughed from your job. Now what will you do? I have heard that watching Netflix and playing video games are quite popular, but you must also pay your bills. It’s too late at this point to take the financial advice of saving for a rainy day. That day is here.
Dip into your emergency savings.
Here at Rowling & Associates, we offer many different pieces of financial advice. One of these is setting aside 15% of your income in emergency savings for situations just like the one you find yourself in now. Under normal circumstances, you should have enough money saved to cover your expenses for 3 months if there are 2 working people in the household, or 6 months if there is only 1 person. If you’ve been furloughed, or had your hours significantly reduced during this pandemic, you can dip into these savings to take care of your monthly expenses.
If you don’t have this (or even if you do!), you’ll want to apply for unemployment as soon as possible. Hopefully, whatever you receive from them plus your stimulus check will be enough to get you through this.
Cut back on necessary spending.
Being confined to your home can give you a lot of time to evaluate your finances and your current spending habits. While it is tempting to engage in online shopping, and it can be fun to see those Amazon packages on your doorstep daily, these purchases add up! And, if we are being quite honest, these are probably things you don’t need anyway.
My financial advice is this: Stop buying stuff! Make sure your purchases are essential – things you actually need, not just things you want. We need food – we don’t need Squatty Potties for every bathroom in the house. During this time, Amazon and the Home Shopping Network are not your friends.
Create a budget.
Take a look at your monthly expenses (rent, food, car payments, cell phone bill). Make a budget and stick to it. Since you can’t go out to movies or dinner, now is the perfect time to do this.
You can also create a plan to pay down some debt. Make a list of your credit card balances and their interest rates. Pay off the highest interest rates first and make minimum payments on the rest. You will save yourself money with this strategy. After the first card is paid off, take the money you were paying toward your newly paid off card and apply it to the card with the next highest interest (along with the minimum payment you were making previously). Lather, rinse, repeat, and eventually you will be debt free!
Do something productive with your time.
This last point is not financial advice, but is just as important! The hardest part of being at stuck at home is dealing with boredom. While Netflix and video games are definitely fun activities, they will not be enough to sustain you through months of isolation in your home. Try to use this time to build some positive new habits into your routine and accomplish some of those tasks you’ve been putting off. Start going for walks, start a workout, start eating healthier, clean out those closets.
If you put a positive light on these difficult circumstances, you will get through this, and you may be better off when it’s all over!