The pandemic means that times have become stressful not only because it is a health-based emergency as it is a financial-based emergency as well. Knowing how a pandemic can affect your money will make it easier for you to plan in advance so you can make it through the tough times.
As the coronavirus affects the way consumers invest, spend, and save their money, especially amidst unemployment, there are several things you can do to ensure that your personal finances won’t suffer negatively.
Refinance Your Student Loans
People who are still bogged down by their student loan debts can think about refinancing these into loans that have the lowest interest rates. In turn, this will decrease your payments every month to a more budget-friendly level. Interest rates are now kept at record lows to help people pay down most if not all of their debts.
People with credit scores that rose recently must make the most out of refinancing because lenders check the credit history of a consumer when considering the interest rate they will offer.
Pay Down Your Existing Debts
If you have extra money, now is the time for you to pay more than your minimum payment every month so you can save money on fees and interest for personal loans and credit cards. Making smaller payments means that interest is going to continue accumulating over longer periods of time and this will cost you more money down the road.
People with good credit might want to apply for a personal loan or credit card with introductory offers with lower interest rates to lower your monthly payment amounts.
More traction can be enjoyed if you will move your balances to lower lines of credit or interest rate loans or negotiate much lower interest on your accounts.
Always pay the least amount on loans that have the lowest interest rates and make the highest payments possible on those accounts that have the highest balances.
Doing this is the shortest and fastest way to pay down your existing debt. Consumers who want to see steady and constant progress can opt to adopt this strategy of paying the smallest balances off first. Although this one might take a bit longer to get rid of your debt, it can be one of the best ways of keeping yourself psychologically motivated to follow through with your plan.
Build Up Your Savings
This current pandemic has become an unfortunate reminder for every one of the importance of having emergency savings in place aside from long term investments for your retirement. A good step to save money easily every month is to take advantage of automatic payroll deductions that could be transferred to your savings account.
To take advantage of your emergency savings, it means you need to look for higher-yielding accounts such as certificates of deposit.
It is important that you save a minimum of 6 months of expenses. However, you have to consider increasing this amount to 9 months to 12 months since it might take longer to obtain employment during a recession.
Your goal should be to save 15% of your income if you hope to retire comfortably.
More than knowing how a pandemic can affect your money can take on money forms, it is important that you do everything in your power to keep it as safe as possible.