Polk Partners shares how to avoid burning through your savings during the COVID-19 pandemic
The COVID-19 pandemic is causing many people to reexamine their relationship with money. People wonder if they have enough funds, especially during a time of job loss and reduced income levels.
Fortunately, many of the same principles that apply to thrift during regular periods now are in full effect.
Attempt to Salvage Income
One of the first maneuvers worth making is to try for unemployment or other relief if you qualify. That move could be enough to help you stave off the worst impact of the crisis. You may also consider looking into gigs or other supplementary revenue sources that are available for home workers.
The key is to try to improve your current financial situation without making matters worse. That will be challenging, but if you’re able to avoid losing the majority of your income, you have a fighting chance to hang onto your life’s savings.
Make Decisions You’ve Been Neglecting
If you find yourself spending more time at home, you’re in a position to review matters that you have neglected for too long. You may want to check into all of your finances to see if there’s hidden value. Most people don’t check their accounts regularly, so now’s the ideal time to do some deep digging.
You should also review all your expenses to find bills worth cutting. Trimming fat will make your budget more adaptable to the current downturn. It makes perfect sense to cut any non-essential bills as fast as you can. You can always pick them up again later when things improve.
Consider a New Strategy for Debt Repayment
A financial crisis is the right time to consider a new strategy for dealing with debt. You may be able to renegotiate certain debts. You can find alternative measures that are to your advantage. It will be worth the effort because the less you pay each month, the more likely you are to get to the other side of the crisis.
The key is doing your best to mitigate losses. Some amount of pain is unavoidable, but with enough work, you can prevent a catastrophe. Polk Partners stresses the need for sound money management, in times of a crisis or not.
It’s Time to Establish a Budget
People who haven’t been working with a budget will be well-served to start one. The first thing to do is itemize the incoming money and the outgoing flow. That gives you a picture of what your present situation is and will guide your decisions moving forward.
If the outgo is higher than the inflow, you’ll end up tearing through savings at a predictable pace. Without a budget, the situation would likely happen much faster. Knowing every detail of your current condition is crucial. It’s the only way to ensure you can come up with a working strategy.
Know the Facts
If you get too emotional during your downtime, you may end up cashing in a 401k or doing something else drastic. If you plan on going down this route, you need to know everything about potential fees and penalties. These costs can skyrocket and eat up large parts of your investments. The only safeguard is to use systematic research to plot your best moves.
Don’t feel bad if you battle your emotions during times of stress. That’s human nature and impacts everyone. However, if possible, it pays to be relaxed and rational as you consider your options. It’s with that type of dispassionate approach that you’ll deal with your struggle head-on. Tough times won’t last, and neither will the monetary implications if you stick to your plan.
Go After Expenses
Cutting expenses requires maintaining a keen eye and staying disciplined. Almost always it’s possible to find less expensive alternatives for most products. At first, you may resist switching brands to one that’s less pricey, but the savings add up quickly.
- Use coupons.
- Shop for discounts.
- Look for alternatives.
All of these essential ideas contribute to spending less, which will save your savings from disaster. If you keep that as your primary objective, it makes the decision-making process straightforward.
Every bit of money you save is significant. With continuous attention to details and a thorough effort, you’ll recover your losses and prevent them from worsening.
Reexamine Your Priorities
A massive crisis, like the current one, makes people spend time reflecting on their priorities. If the debt has been a consistent theme and its impact is adverse, now might be right for implementing a new strategy. Companies like Polk Partners are worth speaking with because they prioritize the client’s needs by offering a single monthly payment with low-interest rates.
Retiring debt is always an option, especially if you cannot pull from investments or savings. Combined with a thriftier spending plan for most items, it’s possible to make substantial changes to your profile. People tend to stay in debt for long periods, and don’t mind it much as long as their incomes are stable.
When something significant goes wrong, like with COVID-19, it’s worth looking at different potential paths. It’s not a good time for decisions like selling a house, though, so you will face limits imposed by the pandemic.
It may seem corny, but positive thinking is a plus during times of crisis. Negativity can efficiently run amok when all the news is adverse. It’s not easy for anyone to ignore a worldwide crisis while looking at the bright side. However, that’s the best thing to do because gratitude will help you stay healthy and allow you to take the enlightened action necessary to prevail.
There’s little doubt that you’re dealing with unprecedented problems. With a steady hand and an eye towards the future, it’s possible to strengthen your position for the present and coming years. It will take a consistent, clear-eyed approach to achieve goals now. If you’re willing to do the work and take the steps, you have a chance to re-arrange your life to be more resilient. That way, when another big event comes along, you’ll be ready.