How Do I Spend This Money During This Pandemic?
There is no doubt that this COVID-19 pandemic has affected everyone on this planet in one way or another and given us all great pause. Millions have been infected by the virus, hundreds of thousands have lost lives, and many families and homes have seen dramatic changes in how they function from day to day.
Another area where many received a major blow during this pandemic is in their wallets. Here in America over 20 million individuals are unemployed, furloughed, or had their incomes drastically reduced because of business closures and shelters-in-place across the country. This has unfortunately resulted in many wondering how they are going to make ends meet. The U.S. Government recently passed the which basically provides fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs for American industries. One provision of the CARES Act has provided Economic Impact Payments (stimulus checks) to millions of Americans to help them through this crisis. Millions more have filed for unemployment compensation through their states and are receiving weekly payouts from this program.
So now that millions of people have received these payments, the major questions are:
What should it be used for?
Should I save the money?
Let's unpack this.
During this crisis what should this money be used for?
Well if you are out of work and missing a paycheck right now, I recommend you use this money to pay for your four walls.
Food
Shelter
Utilities
Transportation
These four items are essentials that are needed for you and your household to survive. You've got to have food on the table. You have to have a roof over your head. You have to pay your electric, gas, water, etc. You also need to put gas in your car.
I know you are thinking but I have these credit cards bills, student loans, and other types of debt. Yes I get it....but right now you are in an emergency and must go into emergency mode to survive. Those others bills will get paid once you are back on your feet but for right now they have to take a back seat until you are able to get back on your feet financially.
Should I save this money?
If your job is safe and you are still getting paid, let me first say you are blessed! I recommend you save this money until this storm passes. You can put it into your emergency fund. By the way if you don't have an emergency fund this would be a good time to establish one. The rule of thumb is that if you are still in debt then set up in a separate savings account a starter emergency fund of $1000. If you are out of debt (except for the mortgage) then build up your emergency fund to 3 to 6 months of your expenses. If you have your emergency fund in place, then consider adding the money to your investments if you are saving for retirement.
As we learn how to wisely spend this money, this is a great time to create and live on a budget. A budget is simply a cash-flow plan where you are giving everyone of your dollars a job . A budget gives you permission to spend and puts you back in control of your money. It's important during this crisis that those four-walls are placed in your monthly budget.
In these unprecedented times I know many are scared, worried, upset and frustrated. The last thing one wants to do during this time is mismanage the money given to them to make it through this storm. Let me assure you we will make it through this storm. Yes there is a lot of fear out there especially in the area of finances but one thing we must use at this time is wisdom over fear. All it takes is a plan.
If you need help with that plan let's get together one on one to find the plan that works best for you so you can win with your money even in a crisis. If you need help creating a budget, I've created a brand new online course "Budgeting Basics In A Crisis" that will show you how to get started.
Contact Me!