How To Save Money in Wake of COVID-19

The Coronavirus was officially declared as a pandemic on March 11. As of now, the pandemic has brought the global economy to a standstill, and the IMF has predicted a recession that could potentially be worse than the 2008 global financial crisis. Managing your finances in a prudent manner is paramount at this moment. Read on as we discuss how you can save money during the Coronavirus pandemic and safeguard yourself from financial disaster.

1. Avoid Panic-Buying

As with other global events that limit our access to basic commodities, the Coronavirus pandemic has induced panic-buying among consumers. It is natural to ensure you have every necessity at your disposal in the event of a lockdown, but we strongly advise against panic-buying at this time. Even if your state or city is under lockdown, hoarding large amounts of commodities will only shorten the overall supply and put a long-term strain on your budget. Think carefully before buying anything in bulk and only purchase what you need at the moment. This will allow you to save money while also helping out other members of your community who may not have the means to buy in bulk.

2. Get In Touch With Your Lenders

If you are struggling to pay your bills for the month, get in touch with your landlord, your credit card company, and other lenders. You can let them know about your financial situation and ask them if they can defer payments without charging interest. Many credit card companies, utility companies, and property owners have established programs that provide creditors with this option. 

 Remember, failing to make payments on-time will go on to affect your credit score. You can avoid this by asking your lender to delay payments for a given period.

3. Take a Look at Your Subscriptions and Automated Payments

If you have subscribed to any streaming services that you are not using at the moment, consider canceling them to save money during the Coronavirus pandemic. Review all your existing subscriptions and keep the ones that you use the most. It’s better to do away with the rest for now. This will free up some of the money allocated to your monthly budget.

If you have automated your bill payments, then now would be a good time to revisit these, as well. You can make some changes to these payments. If you feel this money could be utilized in a better way, then you can adjust it elsewhere and get more use out of it.

4. Refinance Your Loans

The Federal Reserve has reduced its federal funding rate from 0 to 0.25 percent. Consequently, any loans that will be issued will have a very low-interest rate. You can take advantage of this and refinance your existing loans. Refinancing your loans refers to combining all your existing debts into one large debt with a different interest rate and better payment terms. You will have to deal with new closing costs, but in the long run, using this option can save you a lot of money that would otherwise be spent on interest payments.

Bear in mind that refinancing a loan can be hard if you no longer have a primary source of income. Lending institutions will consider this before approving your loan application.

5. Cut Back on Unnecessary Expenditures

You can assess your monthly budget to identify any unnecessary expenses. For instance, if you’re sending your kids to dance classes, music lessons, or sports training, then you can cut back on these expenses for now. Given the emphasis on social distancing, it’s likely that these activities have been canceled, anyway. You can put this money into your savings and prepare for what may lie ahead.

You can also cancel gym memberships and avoid ordering takeout or making excessive online purchases. A little restraint will go a long way in helping you save money.

6. Create an Emergency Fund

Consider creating an emergency fund that can help you manage your expenses for a minimum period of 6 months. This can help you overcome the economic repercussions of the pandemic. An emergency fund can also allow you to spend your money more carefully. We suggest that you analyze your savings and allocate a major portion (at least 50 to 60%) to your emergency fund. You can keep adding money to this fund every week or every month to boost its value.

7. Apply for Unemployment Insurance

Many businesses have been forced to lay off employees during this pandemic. If you have lost your job, then you should consider filing for unemployment. Each state has different eligibility criteria for unemployment insurance. You can visit the website of your state’s unemployment office and find out more information regarding this. Most unemployment programs offer half the amount that you were previously earning. They can usually sustain you for 4 to 6 months. Remember, even if it seems like a small amount, you are still saving money, which is the best thing you can do right now.

Wrapping It Up

There are plenty of things that you can do to save money during the Coronavirus pandemic. From avoiding large purchases to renegotiating payment terms with your lenders, make sure you consider every possibility that helps you reduce your expenses. Stay healthy, stay indoors, and most of all, stay safe!