If the growing economic crisis due to the coronavirus has taught us anything, it’s that being financially prepared for emergencies should be a top priority in our budgets.
Experts recommend keeping enough savings on hand for 3-6 months of living expenses. That money should be easily accessible, so you would forego seeing significant earnings or interest on it.
Unfortunately for many Americans, the opportunity to stow away an emergency fund has passed, and they are now finding themselves without a safety net and without jobs.
So what now? How do you survive an unexpected financial crisis of great magnitude?
1. Get Serious About a Budget
It may be hard, and it may seem like too little too late, but it’s time to sit down and write out your actual expenses for each month. Don’t guess; get your bills out and write down exact numbers.
This includes everything you have to pay, so exclude things like entertainment or vacation money:
- Utilities: Electric, Gas, Water
- Healthcare: Insurance & prescriptions
- Debt service
- Personal expenses: Those that can’t be avoided, like toothpaste
Once you have an accurate picture of what you are required to pay to get by, you can better budget what you have on hand.
Note: Check with your local utilities, as some have agreed to leave services on at this time, even if you miss a payment.
2. Let Go of Long-Term Goals
For the time being, say goodbye to nonessential savings goals. Stop putting money away towards vacations and college funds. Do not pay extra towards your mortgage or credit card debt.
Now is the time to pay the minimum on your credit cards, even if it hurts to do so.
Contact the issuing banks and find out if they will waive late fees and interest for 3 months. You will want to keep cash on hand for more pressing expenses.
3. Preparation is an Investment
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Preparing for worse conditions is not frivolous spending, and if/when things progress, you will be glad you budgeted for supplies. Purchase enough non-perishable food for 14 days in case of forced, strict quarantine.
Purchase candles and/or lanterns, batteries, matches, and a small camp stove in case the electricity is shut off.
Store 1 gallon of water per day for each family member and pet in case water is not readily available. Stock up on gas in approved containers and make sure generators are in working order.
If you do not have a firearm and ammunition, now is the time to purchase one. Stores are busy and you may not be able to get your first choice, but be familiar and comfortable with what you buy.
Make sure you have medications and prescriptions filled. Stock up on items like pet food or infant supplies so you don’t struggle to find them later.
Liquidate assets where you can. Keep cash on hand and in your bank account.
Keep in mind that in times of widespread power outages, your debit card will be of little to no use. On-hand cash will be the most reliable method of payment for goods or services.
4. Be Resourceful
If you are finding yourself out of work at this time, take any and all opportunities to make money. It may not be your ideal schedule, line of work, or pay grade, but we have no idea how long emergency conditions will continue or worsen. While industries like hospitality and tourism are tanking, other industries like healthcare and delivery services are thriving.
Consider taking on roommates if you have the space. Sharing expenses will make your money go much further.
This is not the time to be picky, and realize that there is no time limit on a global pandemic. We may be seeing these conditions for 2 weeks or 2 months. Rather than wait until things become dire, take what you can while it is available. As more people find themselves out of work, jobs in warehouses and stores will fill up.
When we do finally reach better times, make an emergency savings fund a priority.
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