The coronavirus of 2020 took pretty much everyone by surprise. The spread of the virus was swift, with death tolls rising quickly over a short period of time. Social distancing and stay-at-home orders meant small businesses suffered, which led to unemployment numbers reaching levels not seen since the Great Depression.
Trying to predict the next virus outbreak is like trying to predict the next earthquake, says Gregory DeKrey, associate professor of Biological Sciences at UNC. “Eventually, a big one is inevitable, but they’re really hard to predict when they might occur,” he said.
How can you be better financially equipped if it happens again? Here are five things you can do now to be better prepared later:
- Have an emergency fund. Stay-at-home orders lasted about three months until most U.S. cities cautiously opened back up mid-May. So while setting up a savings account with at least three months of expenses is a good place to start, longer would be better, explains Joshua Strong, a financial advisor with Edward Jones. “Having a three to a six-month emergency fund in a savings account is essential. A lot of people don’t know that the average downturn lasts eight months. Your emergency fund should be able to cover the same amount of time. An emergency fund is like insurance; it’s smart to have, but we hope to never use it,” says Strong.
- Avoid major expenses. If you’re planning to make a large purchase, you may want to put it off until things settle down a bit, and you’ve built up your savings.
- Reduce your debt. In addition to saving money, try to pay off any outstanding debt, you have to reduce outgoing expenses. Here’s a helpful blog with five steps to paying off credit card debt.
- Keep the home office. Chances are you had to work from home during the COVID-19 pandemic. If you are planning to return to work when it’s over, you should keep the home office. You may be able to continue to work from home at least part-time, saving on gas and other expenses.
- Manage expenses. There are multiple ways you can save money, which we outlined in this saving hacks blog. A few of those are:
- Eat more meals at home. We certainly don’t want to discourage you from supporting local restaurants, but do you eat out more than you eat at home? Make home cooking more fun! Go online and discover meals that are tasty and easy to make. Slow cook a roast during the day in that crockpot you bought at the thrift store. Make large batches so you can freeze and eat later or eat for lunch the next day.
- Shop around for insurance, cable, and phone companies. Before renewing your contracts, look around to see if you can find a better deal. If you find one, call your current company and ask them to match your new quote. Many times, companies will work with you to retain your business. You could see additional savings each month without changing a thing. Win-win!
- Lower your mortgage rate. Is your interest rate higher than the current historically low rates? Refinancing is a simple way to reduce your monthly expenses. Many companies like NASB have experienced loan officers who can quickly help you evaluate if refinancing makes financial sense for you.
- Give up those premium TV channels, and cable altogether. Spending more time on Netflix than HBO? Let go of that additional monthly cost and hit up Redbox or Hulu for other movie needs.
The hardest thing about being prepared for something like this is you never know when it can happen again. If you need help with setting up a savings account, give the experts at NASB a call at 800-677-6272.