While times are uncertain for many, there are ways you can stay disciplined, save money, and enhance your financial security.
SAN DIEGO (PRWEB) November 18, 2020
The COVID-19 pandemic has brought the topic of managing money to the forefront, causing more people than ever to wonder if they will be able to make ends meet. USE Credit Union has reported that more than 75% of non-transactional calls received since the start of the COVID-19 pandemic were from members concerned about their financial future, citing economic hardship as the primary reason for concern.
“Managing, budgeting and saving money is a consistent concern without even factoring in a pandemic,” said Todd Tharp, Chief Financial Officer at USE Credit Union. “While times are uncertain for many, there are ways you can stay disciplined, save money, and enhance your financial security.”
Crisis Money Management: If You Lost Your Income
Tharp recommends the following steps if you’ve experienced a job loss or industry downturn that suddenly cut off your income:
- Apply for unemployment benefits. File for unemployment with your state’s Department of Labor.. Generally, you may be able to do it all online. It’s important to file as soon as possible. Some states have a waiting period after you file, and they’re fielding a high volume of unemployment applications right now.
- Determine essential expenses. Once you have applied for unemployment benefits, you will know what money you will have coming in. Write that down, along with your available savings, and you’ll know exactly what you have available to spend. Next, write out what your essential expenses are for food, utilities, shelter, healthcare, transportation, etc. Cable is not essential. New clothes are not essential. Birthday gifts are not essential. Now’s the time to save money. Those five categories are where you allocate spending first.
- Identify all your assets. A financial setback is the time to use your emergency savings. On top of that money, look and see what other financial assets you have. Do you have gift cards that can help you pay for food or gas? Do you have credit card points that you can put toward gift cards for essentials? Do you have items you are not using that you can sell for extra cash? All these things are assets that you could use for essentials. Also, for those affected by COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has temporarily relaxed government restrictions on, early distributions from retirement plans like 401(k)s and traditional IRAs, which may be a good source of emergency cash for some people.
- Put debt to rest. Debt is a burden at any time, but worrying about debt during a personal money crisis can derail effective money management. List all your monthly debt payments that do not fall into your essential categories. Immediately contact each creditor or financial institution and explain your situation. Ask if they have any programs that can help you, such as by lowering fees, reducing interest, or deferring payments. If they offer free financial counseling, take it. Ask your creditor how deferrals or modifications could affect your loan and possibly your credit.
- Contact utilities, insurance, and mortgage companies. Just as you did with your creditors, reach out to your utility company, insurance agent, and mortgage company and explain your situation. They may all have special assistance programs that can help you better manage payments.
Crisis Money Management: If You Have a Steady Income
Even if your income is steady and you don’t face increased expenses, bad-news headlines can make you concerned about your personal financial stability or cause you to wonder how you can save money. Here’s what you can do to better manage your money and protect your finances:
- Understand where your money goes. Take a close look at all your bills and credit card statements over a 30-day period to get better insight into what you are spending your money on. Look for easy-to-use Money Management tools through your institution’s Online and Mobile Banking to give you more visibility into your accounts and spending.
- Plump up your cash cushion. An ideal emergency fund should have enough to cover at least six months of expenses. Based on how much is currently in your emergency fund, make a plan to increase it. Take a look at your spending and determine where you can cut back. Then, tuck that extra money into your emergency fund or start adding money to your fund automatically by setting up recurring transfers from checking to savings.
- Prioritize saving and pause spending. A great way to feel more secure in your finances is to pause your spending and concentrate on saving for a specific period of time. This doesn’t have to be long-term or difficult. Commit to a single day each week when you won’t spend any money. Or commit to forgoing one specific expense all month, like drive-thru meals or fancy coffee drinks. Add the money you’ve saved to your emergency savings.
- Bear down on credit card balances. Look over all your credit card balances and interest rates. Could you transfer any balances on high-interest cards to your lowest-interest card without incurring any fees? If you can, then do so and start paying off the balance. Commit to not adding any additional debt to your cards that you cannot pay off each month. For example, USE Credit Union’s popular Platinum Mastercard® credit card makes it easy to save money on transferred balances by offering great rates and no balance-transfer fees.
- Manage your mortgage. If you have a mortgage, it may represent a significant monthly expense. By refinancing to a lower interest rate, eligible homeowners could reduce their payments or shorten their term to pay off their mortgage faster and save on interest.
Guard Against Fraud & Identity Theft
During times of uncertainty, con artists are very clever at leveraging consumers’ fears to steal money, information or identities. Fraudulent emails that request charitable donations; calls from individuals claiming to be debt collectors or debt settlement companies; and mail notifying you about winning a prize or lottery are all common scams.
- Never share account, credit card or other financial information except with a business or organization you trust.
- Don’t click on any links or download email attachments you are unsure about.
- Don’t put up with high-pressure sales tactics.
- Check your financial statements monthly and your credit reports at least once a year.
- Shred financial documents before throwing them away (but hold onto certain important documents like tax returns).
We Can Help
Financial institutions like USE Credit Union are committed to the financial well-being of members and communities. If you are experiencing a financial setback and expect to have trouble making your credit union loan payments, the first thing you should do is talk to your bank or credit union to come up with a solution.
About USE Credit Union
Founded in 1936, University & State Employees Credit Union (USECU) empowers nearly 60,000 members to achieve financial wellness through a full range of financial products and services, including checking and savings options, credit cards, loans, mortgages and more. USECU now has more than $1 billion in assets and offers accessibility to its members through eight branches in California, nearly 30,000 surcharge-free ATMs across the nation and 24/7 online and mobile Banking access.
USECU membership is open to all California university employees and students as well as California state employees, including California Department of Motor Vehicles, California Highway Patrol, CalPERS and CalTrans, along with others who live, work or worship in Alameda County, Sacramento County, San Diego County, Santa Clara County and Yolo County. As a not-for-profit community leader, USECU partners with causes, events and organizations that reflect a commitment to health, wellness and inclusiveness. Learn more at usecu.org.