Reports at the end of last year showed that the average American has about $4,500 in savings at any given time. And, while most financial advisors suggest having enough money in a savings account to support you and your family for three to six months during an emergency, that’s not always possible.
Nobody could have predicted that 2020 would see the beginning of a worldwide economic crisis and now that we’re in the midst of a pandemic that’s affecting companies and workers on a global scale, everybody is beginning to think about how to save money during the crisis.
We sourced information from professional advisors to bring you our expert tips on how to save money during a crisis such as coronavirus and how to ensure that you’ll come out on the other side financially healthy as well as physically.
Don’t Touch Your Investments
The pandemic has caused the stock market to reach lows that the United States hasn’t seen since the 1987 crash. And, that rightfully has a lot of people worried. However, experts are urging to leave your investments alone. Ryan Marshall, a New Jersey-based certified financial planner, thinks so at least.
Marshall told CNBC that “If you truly have a diversified portfolio, some of your holdings should be doing better with this recent market downturn.” So, avoid the temptation to run out and make rash decisions with your investments.
Another financial advisor made the point that if you have money in a 401k, for example, you should be fine unless you’re nearing retirement in the next year or so. If you had planned to retire in 20 years, you will still retire in 20 years and things will have evened out by then.
Stick to the 50-30-20 Rule
One personal finance writer for NerdWallet spoke with NPR and said that her advice to others (and something that her family is currently following) is to try to continue to stick to the 50-30-20 rule as much as you can.
Kimberly Palmer, a finance writer, told NPR that her family is allocating 50% of their current incomes to their necessities. “So that's, like, our mortgage and groceries,” Palmer said. “30% is for wants, and that's the restaurant spending or ordering takeout. And then 20% is debt payments and savings.”
While this might seem like a stretch for some families, it’s important to remember that your “wants” are changing drastically now. You aren’t able to sign the kids up for spring baseball, go out to the mall or spend on an evening out at the bar. So, you’re able to save even more in that category.
Cut Out Non-Essentials
This might seem like an obvious thing to do during a recession or even when you’re facing unemployment. However, there’s a lot you can do to reduce your spending and optimize your savings during the pandemic.
One financial advisor suggests making a list of every non-essential expense you have. This includes everything from Netflix and Disney+ to food delivery, memberships and everything in between. Rank them all according to importance and choose up to five to keep that you deem a little more essential for your family.
Cut the rest out for the next couple of months and replace them with other activities at home. It’s one of the easiest ways to save money and you’ll likely find that you’re quickly able to adjust to life without that luxury.
Prioritize Certain Bills
If you’re unable to pay all of your monthly bills right now, it’s best to make a list of all of the ones that are due and prioritize certain ones. Last week, for example, the Department of Education announced that it is waiving interest accrual for deferments and forbearances until September.
No student loans are due until then and you won’t accrue interest by not paying them. So, you might be able to put those payments on hold and use that money to pay a more essential bill such as your mortgage or utilities.
Also, be sure to check with your mortgage company or utility company. Most cities are preventing gas and electric companies from shutting off service during lockdowns. And, while you’ll still eventually have to pay the bill, it means you might be able to allocate that money to another bill that is more urgent.
Saving With Your Debit Card
As you begin to manage your monthly bills and expenses, be sure you’re paying online or even in-person with a debit card that’s optimized for savings.
Cheese Debit Card one of the easiest ways to save a lot, or at least a little, during this pandemic. It requires that you do literally, absolutely nothing aside from signing up. With 0 banking fee, your FDIC-insured Cheese Debit Card can earn you a lot by cashback and saving bonus. Saving money doesn’t get easier than that. Interested in learning more? Sign up today.