How to Budget and Be Prepared for the Covid-19 Crisis

How to Budget and Be Prepared for the Covid-19 Crisis

Jacqui Kearns, Chief Brand Officer

The Covid-19 pandemic is impacting people all over the world – and our tri-state area has been hard-hit. The governors of New York, New Jersey and Connecticut have imposed1 restrictions on businesses of all types, with measures being especially constricting for gyms, entertainment venues, restaurants and bars. In times like this, public health takes precedence over everything. But the reality is that for families and businesses throughout our region – including many Affinity members – times are going to be tough.

What can you do to make it through the looming crisis? There are no easy answers here, but after stepping back and taking a deep breath, there are a few things you can do to shore up your finances and help protect your loved ones.

person discussing business plans

Learn how to budget for an emergency – now and in the future
This one is something most of us know we need, and yet it can also prove the most difficult. Whatever actions are put into place by governments and companies to ease the financial burden, you’ll still have bills and expenses. These become more daunting if your hours have been cut back or your place of work has been shut down entirely. If you haven’t created a budget, now is the time to start.

Typically, personal finance experts would advise cutting unnecessary entertainment, dining, etc., expenses first. The closure of movie theaters, bars and restaurants throughout the tri-state area makes this easy. But if movies are something you enjoy, now is a good time to subscribe to Netflix, Hulu or other streaming service, which typically costs less per month than theater tickets.

Though many people are fearful of grocery stores running out of food, it’s not2. And since food stores, as of now, remain open, stock up on inexpensive items that will last awhile (but avoid unnecessary “panic buying,” which could quickly deplete your budget)). Restaurant take-out and delivery are still options, but before you order out, consider eating in instead.

Creating a “Covid-19 budget,” in which you adjust your living expenses in accordance with the new (albeit temporary) reality, could have many long-term benefits after life returns to normal. Learning to live with less and being more careful with money – and understanding there are affordable options out there – will serve you well. And in the event of a future emergency, you can draw on the important lessons learned.

Don’t neglect your savings
You might be tempted to think that now isn’t the time to worry about putting aside savings, that the crisis overrides all other concerns and that you should spend as much money as possible on bulk buying and ensuring you maintain your standard of living through the crisis. Considering that we don’t really know how long this crisis will last, that’s not a good idea. In fact, now might be a good time to put maintaining and building up your savings first and foremost. While in normal times personal finance experts – myself included – would say that you should avoid making minimum payments on credit cards, bills and other expenses, if your cash flow has been severely reduced by the crisis you should probably take advantage of being able to pay less. You never know when a medical emergency, car or home repair or some other unforeseen expense will come up in the midst of all this, so have plenty of cash on hand!

One problem that may come up is that the Federal Reserve’s rush to head off recession by cutting interest rates has resulted in savings yielding little to no return.3 But there are options for still making your savings worthwhile, like Affinity Federal Credit Union’s new inverted savings or SmartStart Savings account4 which starts you off at 2% interest on any balances between $0 - $2,499.99, with that rate only becoming lower after you’ve accumulated savings above that amount. This encourages you to start an emergency fund that also pays off right away!

Find out what aid is available
If you’ve been laid off, furloughed or had your hours cut because of the Coronavirus, or you’ve had to take off from work to care for your children or a relative, look into whether you qualify for existing programs like paid leave or unemployment benefits. You can find information on unemployment insurance eligibility for New York5, New Jersey6 and Connecticut7 online. A pending bill8 before Congress would expand paid sick leave for those who’ve had to stay home for various Covid-19 related reasons. You should also be sure to keep an eye on the news for additional government aid and stimulus programs aimed at helping the economy – and you – recover during this unprecedented crisis. These programs can be a vital lifeline when your income and cash flow have been diminished or dried up.

Ask your financial institution for advice and help
Your financial institution can be a valuable source of reassurance at a time like this. If you’re an Affinity member, there are various tools, products, services and resources to help you retain or regain your financial wellbeing. As a nonprofit credit union, Affinity can offer products – such as the SmartStart Savings account – that aim to enhance your wellbeing first rather than that of shareholders, because we have no shareholders. Our obligation is to our members. We also require no minimum opening deposits or minimum balances on our MoreSavings accounts, and no minimum deposit on our Affinity checking account. These advantages will be important if you find your cash flow and by extension your overall balances running low.

Most importantly, we prioritize members’ financial wellbeing above all else, which is why we provide ongoing personal finance education and why we’ve established a page that keeps you updated on news and insights about the ongoing health and financial impact of Covid-19.

The Covid-19 crisis will likely prove to be like nothing any of us, regardless of age, have experienced in our lives, but provided you take the right actions and approach, you can minimize the disruption to your life, the impact on your finances and your future vulnerability. Make sure you keep checking back with Affinity for ongoing information about Covid-19 and how to manage your health and finances.

For additional information and updates from Affinity about COVID-19, please visit https://www.affinityfcu.com/banking/we're-here-for-you.aspx

                                                   

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from https://www.cnbc.com/2020/03/16/new-york-new-jersey-and-connecticut-agree-to-close-restaurants-limit-events-to-less-than-50-people.html

2 Retrieved from https://www.nytimes.com/2020/03/15/business/coronavirus-food-shortages.html

3 Retrieved from https://www.bloomberg.com/news/articles/2020-03-17/upside-down-world-of-negative-rates-is-coming-for-u-s-savers?srnd=premium&sref=3PQXfLzW

4 Retrieved from https://www.prnewswire.com/news-releases/affinity-federal-credit-union-launches-smartstart-savings-account-with-inverted-savings-benefit-for-goal-driven-members-301014404.html?tc=eml_cleartime

5 Retrieved from https://www.ny.gov/services/get-unemployment-assistance

6 Retrieved from https://myunemployment.nj.gov/before/about/who/

7 Retrieved from https://www.ctdol.state.ct.us/progsupt/unemplt/new-faqui.htm

8 Retrieved from https://www.forbes.com/sites/tomspiggle/2020/03/17/the-families-first-coronavirus-response-act-what-it-does-for-employees-who-need-paid-sick-leave/#606b50ac6f1a