How to Prioritize Your Finances During COVID-19
It’s important to focus on your health during the COVID-19 crisis, but your finances should also remain a primary concern. With many people out of a job and struggling to pay the bills, it might seem like you don’t have many choices but to hope for the best. Prioritizing your finances can have a huge impact on what life will look like, after COVID-19.
Performance Mortgage recently shared a comprehensive to-do list for prioritizing your budget. Follow these steps to protect your financial health:
1. Understand Your Options
Utility companies, mortgage servicers, student loan servicers, and some landlords are currently offering a variety of programs to help with payments. It is important to understand that these are not forgiveness programs and that you are still going to have to pay back everything you owe, even if the pressure is off for the moment.
2. Read the fine print
Make sure you understand all the details of these options before opting in. You should especially focus on what will happen at the end of the agreement and what will be expected of you.
3. Set a budget
Even if you’ve never created a budget before, now is the time! Look at your past financial records to get a clear picture of exactly how much money is coming in and going out so you can accurately prioritize. Doing so will also help you identify any costs you can cut. Several apps can help you do this if you aren’t sure where to start—simply Google “free budget app” to find one that appeals to you.
If your income has shrunk or stopped altogether, you might not have the money to cover everything in your budget. This is where prioritization comes in. Performance Mortgage recommends Dave Ramsey’s Four Walls approach: food, utilities, shelter (housing/rent/mortgage), and transportation. These four things are essential, so make them priorities in your budget and cover them before you allocate money for anything else.
5. Keep Making Payments
Once your Four Walls have been taken care of, continue to make the minimum payments on time for all your other lines of credit, credit cards, student loans, etc. Even one late payment can have a negative impact on your credit score—but if that’s not a priority right now, that’s okay. Still, try to at least make the minimum payment so your life after COVID-19 isn’t heavily impacted.
6. Use your stimulus check wisely and save if you can
Don’t forget to include your stimulus check in your budget! You can use it to catch up on past-due bills, pay your housing costs in advance, and more. If your income hasn’t taken a hit, save your stimulus check. No one knows what the future will bring, and your future self might thank you for the safety net.7.
7. This too shall pass
This pandemic has tested all of us—it’s something we’ve never experienced and hopefully something we’ll never have to experience again. Eventually, the dust will settle, and life will return to our new normal. When that time comes, make sure you’re in the best position to move forward. The financial decisions you make today will impact your future.
We hope this checklist will help to relieve some of the stress you’re under as we all deal with the effects of the COVID-19 pandemic. The most important things you can do are stay safe and prioritize your family’s necessities. At the end of everything, you’ll come out on top and prepared to keep moving forward.