Posted on April 12, 2020 Last Updated: May 12, 2020
The recent outbreak of COVID-19 virus has sent the financial markets, local commerce and life itself into a tailspin. In times like this, the first thing consumers worry about is how they are going to pay their bills. This crisis, like others before, will pass and life will adjust and resume, but there are some basic things consumers can do to protect their financial interests in the near-, short-, and long-term.
Things to do now
This list of recommendations focuses on the immediate future. As news evolves and conditions change, it is important to work with the information we have now, rather than looking too far ahead.
- Prepare, don’t hoard. Making sure that you have food and water on hand is important because you can’t help your family or others if you are not prepared yourself. Hoarding only creates panic and potential waste (perishable goods), so only buy what you need, ensuring others can do the same.
- Know your financial institution’s COVID-19 operations. Many banks and credit unions have changed their hours of operations and means of doing business (which means drive-thru only in many cases), which could affect your ability to bank on location. Also, knowing where your closest “in-network” ATM is will help you avoid transaction fees if you need cash in a pinch. However, some banks and credit unions are taking extraordinary steps like waiving such fees during this time.
- Pay your bills. Banks, credit unions, and other lenders are providing some relief for payments, but if you are able, pay your bills. The best way to keep the economy from stalling is for everyone to carry on business as usual as much as possible. If money is tight, reach out to see what special considerations are being given during the COVID-19 outbreak. You may be able to skip a payment and/or have your loans modified.
- Help others. Keep an eye out for other people who may be vulnerable and need help. Look for ways to build community and help those in need, such as your elderly friends and neighbors. Donating food or money to your local food pantry is a great way to help those around you.
Short- term ideas
Short-term recommendations focus on the next 1-3 months and provide tips on shoring up your personal finances.
- Review your expenses. When the economy is booming, it’s easy to make impulse purchases and sign up for services that are considered luxuries. Review those subscriptions or recurring purchases to look for opportunities to trim your expenses.
- Take advantage of interest rates. With the recent rate cuts by the Federal Reserve, borrowing money has never been more affordable. Banks and credit unions can offer attractive rates on credit cards and balance transfer offers that can help lower the interest you may pay over time, freeing up cash.
- Pay off debts. If you have extra money in the bank, consider paying down your debts or consolidating to reduce interest and pay them off faster. Paying those debts down ensures that you have access to extra cash for emergencies.
- The stock market is down to three-year lows but won’t stay there forever. If you have disposable cash, now could be a great time to invest in stocks, mutual funds and other equity products. Buying now may increase likelihood that investments will gain as the market rebounds and prices normalize.
Long term ideas
Long-term recommendations focus on personal finance tips for the next 3-12 months.
- Focus on debt. For the longer-term debts like car loans, student loans and personal loans, look at consolidating, refinancing, and paying down quickly. As we emerge from the COVID-19 crisis, make sure that you don’t find yourself in a position where you have to decide between paying your mortgage or your credit card bill.
- Don’t panic. While we don’t know exactly when things will rebound, the shares in stocks, bonds and mutual funds that you currently own will likely grow again. By selling your investment assets now, you eliminate the chance to regain some of the losses you’ve seen in your investment portfolio.
- Learn from this. Use what you are learning from the COVID-19 situation and be prepared for the next crisis. Your grandparents and great-grandparents lived through the Great Depression, and it changed how they lived, from pinching pennies to saving bacon fat for future cooking. The COVID-19 crisis is a good time to reset how you are managing your finances and how you’ll better prepare for the next one. The best way to prepare yourself financially for the future is to live within your means, cut unnecessary debt and save with the future in mind.
KEMBA is here to partner with you
While KEMBA branches may not be currently accessible in traditional ways, our drive-thrus remain open and appointments are available, plus online resources are here to help you plan for the short and long term and make sure that you are ready for these bumps in the road. If you don’t have a banking partner, our Member Service Representatives are here to help. Call a KEMBA Member Service Representative today at 800.282.6420, option 4, to learn more.