Catch up on your finances, boost your savings, and other personal finance tasks to knock out during the coronavirus shutdown
In response to the coronavirus pandemic, most Americans are living under strict social distancing or stay-at-home regulations. While necessary, such measures have a significant impact on the job market, affecting workers nationwide. As a result of the crisis, some analysts predict a 34 percent GDP decline during the second quarter of 2020.
Dramatic fluctuations in both the labor and stock markets can leave you feeling anxious about your finances. However, during economic uncertainty, it is important to focus on the things you can control. Take this time at home to address small—yet important—personal finance tasks, such as updating your online credit cards, consolidating accounts, contributing to an emergency fund, and revising your budget.
Personal Finance Tasks to Do From Home
Despite the projected downturn, Goldman Sachs predicts a 19 percent rebound during the third quarter of 2020—a relatively positive forecast. By addressing these smaller personal finance tasks today, you can be better prepared for the future. Tackle one task at a time and stay mindful of your overall financial goals.
1. Consolidate your savings accounts
Savings accounts with a minimum balance requirement or monthly fee may be costing you more than they’re worth. By consolidating your savings, you might be able to surpass the minimum balance requirements and reap the benefits of a higher interest rate.
Consider opening a high-yield online savings account. Virtual banks do not have the same overheads as brick and mortar institutions, allowing them to offer slightly higher rates despite recent cuts from the Federal Reserve.
2. Compare your credit card interest rates
Review your credit card accounts and note their current interest rates—they may have increased since you first applied. If you can find a better deal elsewhere, it may be a good time to switch.
Be mindful of transfer and membership fees when selecting a new card. Changes to your line of credit must be made with caution, especially when closing an account. Leaving accounts open despite not using them can help boost your score. Avoid using accounts with higher interest rates if you are unable to pay off the balance every month.
3. Check expiration dates
Credit cards with introductory rates, such as zero percent APR, expire after a set period of time. Mark these deadlines in your calendar and pay off the balance before the rate increases.
If your debit or credit cards expire soon, order replacements and ensure the bank has your correct address. Check the expiration dates of any accrued airline miles or points. If your miles expire soon, consider taking a cash redemption, if allowed. The extra cash can be used to cover your bills during gaps in income. You can also donate your airline miles or points to an organization like the Make-A-Wish Foundation.
4. Update your online wallet
While autofill features speed up online purchasing, they can make it a little too easy to click “buy.” First, remove any expired cards or accounts. Then, set the card that is the most suited for online purchases as the default. For example, use a credit card with a low interest rate and competitive award programs for daily purchases.
Alternatively, remove all saved cards to make online purchases less convenient, allowing you a moment to consider the necessity of the purchase.
5. Review your long-term investment accounts
401(k) retirement plans are built for the long-haul and typically equipped to weather the storms caused by temporary economic slumps.
If your emergency fund can carry you through the next three to six months, continue to make contributions to your 401(k) or long-term investment accounts. While the stock market is down, you may be able to purchase stock at lower prices and position yourself for increased growth when the economy recovers.
6. Save all additional income
If your job has not been affected, place any bonuses, raises, or commissions you receive into a savings account. By diverting all surplus cash into a separate account, you can be better prepared for any unexpected gaps in employment.
7. Adjust your budget
Reassess your monthly budget and establish your new “essentials,” such as groceries or household supplies. This does not mean you should over-buy. Purchasing a few more items every time you visit the store can help you create a comfortable buffer.
Your entertainment budget may naturally decrease, allowing you to relocate funds into a savings account. By reassessing your monthly budget, you can utilize your income more efficiently and ensure every penny is put to work.
8. Consolidate your subscriptions
Review your ongoing payments, such as streaming services, gym memberships, or magazine subscriptions. You may want to consider freezing one or two of such services for a few months. Or perhaps you want to devote some funds to a new charitable gift to help respond to the pandemic.
Look at consolidating your subscriptions. For example, Amazon is offering Prime members free access to its music streaming services for three months.
9. Save your “social” cash
Closures of non-essential businesses and self-isolation mandates have reduced the amount of time and money we can spend on recreational activities. However, by acting as if these charges are still being accrued, you can save a considerable amount of cash every month.
For example, if you typically get drinks with friends once or twice a week, move that money into your savings account. These charges may seem small, but they quickly add up. Reviewing your previous months’ outgoing cash can help you calculate averages while giving you valuable insights into your spending habits.
10. Take a deep dive into your bank accounts
Take this time to conduct a complete review of your income and spending. Look at your spending habits and find opportunities to cut costs. This type of review is incredibly helpful—not just during these unprecedented times but for your overall financial health. Understanding your own spending habits can help you build a more robust, sustainable budget.
In times of economic uncertainty, it is easy to feel untethered and out of control. However, by completing these simple personal finance tasks, you can stay on top of your finances and weather the storm.
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