IT'S COMING AGAIN!
Well it's the year 2021. At the time of this writing we are still in the throes of the worst pandemic in modern history. Just in the United States alone over 20 million people have been infected with the COVID-19 virus. 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.
Another area where the pandemic has affected a lot of people is in their wallets. Here in America millions are unemployed, furloughed, or had their incomes drastically reduced because of business closures and shelters-in-place across the country. We are even seeing the devastation of long food lines and the possible crisis of people being evicted from their homes. This has unfortunately resulted in many wondering how they are going to make ends meet. For many it appears financial assistance is coming again. The U.S. Government recently passed another stimulus package giving $600 to individuals, $1200 to couples, and $600 per minor dependent child. To qualify for a full relief payment, one has to make $75,000 or less ($150,000 if married). Partial payments are made to those whose incomes exceed those levels but don't top $99,000 ($198,000 if married). This package also extends unemployment benefits to millions of Americans.
So now that millions of Americans will once again receive 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.