As many American families know all too well, the coronavirus pandemic is an economic crisis as much as it is a health crisis. Millions of Americans have filed for unemployment aid since President Trump declared a national emergency in March — erasing a decade of record employment gains.
If you’ve faced income loss as a result of coronavirus, here are a few steps you can take to lessen the financial burden and position yourself to bounce back as the economy recovers.
What to do if you experience a loss of income
1. Review your budget
If your household’s income is about to change because of coronavirus, it’s time to review your budget.
In order to create a realistic spending plan, work out what your reduced income will be, and calculate your current monthly expenses. Through this you can determine if your reduced income still allows you to afford all of your basic needs, or if you need to find additional savings — or an additional source of income, if possible.
2. Eliminate what you can
Part of reviewing your budget should include identifying what unnecessary costs you could reduce or get rid of entirely. Some cost cutting will be more obvious than others: social distancing is preventing most of us from spending money on social activities, gym memberships, and transportation, for example. But if you’re still struggling to come up with ways to reduce your expenses, read this guide for tips on how to get creative.
3. Talk to your lenders
It’s one thing to think about how to cut costs, but what can you do if you have debt? Whether it is credit card debt, a car loan, or a mortgage to pay, if you believe that you’re at risk of missing a debt repayment because of coronavirus, the very first thing you need to do is get in touch with your lender, and see if you are eligible for a payment holiday.
4. Make sure you’re not missing out
The coronavirus pandemic is not an ordinary situation and the federal government is responding to these challenges with benefits and relief options to support American households. To ensure you don’t miss out on any help that you’re eligible for, make sure you review our guide to COVID-19 government relief.
5. Don’t be so hard on yourself
It’s okay if you feel like you’re going backwards financially right now. You may find yourself in a situation where you need to tap into your savings or take on additional debt if you have no other options.
The important thing is to be prepared and carefully consider and review all options available to you before jumping into anything that could have a long-term impact, like taking out a payday loan, racking up high-cost credit card debt, or taking money out of your retirement savings. If you’re making decisions about your finances, think about how you can get back on track when things go back to normal.
While being proactive about your finances is essential, don’t forget to look after yourself and your mental health during this challenging period. We’re all in this together.