You’ve likely heard a slew of financial advice throughout your lifetime: save 25 percent of your earnings, put 15 percent of your salary in retirement, don’t spend more than 30 percent of your income on your home, etc., etc.
But you may be thinking, how relevant is all this great financial advice when we’re living through a global health and economic crisis? How do I prepare and save when everything feels uncertain?
Luckily, even in difficult times, we can prepare for these scenarios. Here are a few tips for navigating your finances when you’re not sure what tomorrow will bring.
First, calculate whether you have enough funds in an easily-accessible savings account to tide you over if you were to lose your main source of income for a few months. Experts recommend 3-6 months worth of housing payments, food costs, gas-refills, utility bills, or anything else you and your family need to get by.
Having this pool of funding will help you while you’re hunting for a new job, or even tide you over while you work a temporary or part-time position while searching for something more long-term.
If you don’t have enough funds saved up, start directing your savings to that account now, so you can start preparing.
Continue to devote a portion of your income to paying off your bills, whether that’s credit cards, student loans, or other debts.
In an emergency, you may not be able to devote your resources to those, so it’s important to eliminate or pay down as much as you can ahead of time.
If a financial crisis were to occur and you had to cut spending, consider now what some of those luxury items might be. Do you need streaming services? Do you need your gym membership or can you work out at home for a few months? Can you cut back on a vehicle or are they all necessary?
You can still plan for retirement, even if you’re not putting as much money in as you would like. Setting aside even a little bit each month will pay off in the long run, as time is your friend when it comes to investing in well-balanced mutual funds.
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