With coronavirus disrupting our daily lives, many people are worried about the effects on their budgets. Being told to sit on your hands and wait while uncertainty swirls around you can just add to your stress levels. Taking some practical steps to manage your money can give you a better handle on your finances right now.
Our mission at Simple is to help people feel more confident with their money, and that seems more important now than ever. We hope that the budgeting tools built in to your Simple Account—like Expenses and Safe-to Spend®—along with these tips can help you feel more in control while so many things in the world seem uncertain.
The big economic picture
Uncertainty drives anxiety—and that shows up in the economy. With reports of the stock market dropping and businesses scrambling, it’s easy to get caught up in that anxiety. But take a step back—and a deep breath—and look at the big picture.
- Your Simple account is FDIC-insured (up to the legal limits) via our partner bank, BBVA USA. While interest rates may fluctuate, the balance in your checking account is unaffected by the market ups and downs
- Markets tend to return to health over the long term. Financial experts are giving a variety of advice, with some saying that, just like your face, your 401k or retirement accounts may be good things not to touch right now. But it all depends on your individual circumstances and how close you are to retirement, so consider talking to a financial advisor (or your HR rep, if you have a 401k at your job) about the smartest move for you right now
Managing your savings
If you have savings tucked away, like in a Protected Goals Account, you might be wondering how interest rate changes will affect you. It’s true that most interest rates will probably go down (meaning you earn less interest on your money), but your principal balance (the amount of actual money you have in the bank) won’t. So you might want to just sit tight and keep any savings you have available in case you encounter unexpected changes to your financial situation—and consider continuing whatever saving-up you’re already doing, if you can, to support your longer-term needs.
That said, if you’re saving for something longer-term and are concerned about falling interest rates, now could be a good time to think about whether a fixed-rate savings option, like a No-Penalty CD, would be useful. The main benefit to a CD is that the interest rate stays the same for the CD’s entire term, so you can count on a reliable return even if interest rates are falling elsewhere. And a No-Penalty CD allows you to withdraw your money early with no fees in case you do need to tap into your savings a few months down the line.
Managing your debt
With rates going down, now might be a good time to get a better handle on your debt.
- Corral credit cards. If you have credit-card balances, see if you qualify for a card with lower interest (or a no-interest introductory rate) and transfer your balances from higher-interest cards (though be aware there’s usually a fee for transfers)
- Manage your mortgage. Have a mortgage? Refinancing at a lower rate can not only reduce your payments now, but help you spend less on interest in the long term. (There are some costs to refinancing, so do your research)
- Ease student loan stress. If student loan payments are straining your budget right now (especially if your income is taking a hit at the moment), you could look into refinancing or deferring your payments for a time. The recent announcement of a possible student loan interest waiver may have an impact on how these options affect you, so call your loan servicing company to get details
Managing your budget
Whenever there’s a big upheaval in the world, the ripple effects can show up in your day-to-day budget. Taking control of your spending can help you weather both the concrete challenges and the stress of the unknown.
Stock up smarter
Lots of folks feel the need to stock up on supplies right now. Yet few of us have money in the budget to clear out Costco. Here are some small, reasonable ways to get what you need and stay on budget.
- Groceries: To reduce waste and grocery bills, center your shopping list on affordable, shelf-stable foods that won’t spoil in case you’re stuck at home for a bit—like rice, pasta, and beans. Look for fresh foods that freeze well (like bread and shredded cheese) and long-lasting produce (like onions and carrots)
- Medications: Consider picking up just the few things you’d need if you had a winter bug, like cold medicine and cough drops. If you take a prescription medication regularly, give your doctor a ring to ask if you need an extra supply—and be sure to call your insurance to make sure they’ll cover it
- Shop your own home: You might be surprised at how much you already have in your house to keep you comfortable while saying in. That lonely can of pumpkin in the back of the cabinet? Make curried pumpkin soup! The stack of half-finished crafts or unread books in the corner? Cheaper fun than renting movies online! Do an inventory of what’s right under your nose before you run out to buy more
Trim spending, stay on top of expenses
With the economy changing rapidly, keeping a budget and tracking expenses can help you maintain better control and give you peace of mind. If you haven’t examined your budget closely in a while, now’s a good time to look for any waste and opportunities to save money.
- If you’re not already budgeting, set up Expenses to get started—here’s how
- Holed up at home? See if you can streamline your streaming services so you have plenty of entertainment options without straining your budget
- Look for monthly bills you could reduce—like a better internet package or cell phone plan
- Unsubscribe from those oh-so-tempting sales emails (Unroll.me makes it super easy)
- Ordering food delivery can be a convenience and a comfort—and it can also eat into your budget quick. Look for mouth-watering recipe blogs that help you commit to cooking at home more often; Budget Bytes is a great resource for budget-friendly ideas. (And if you do order in, consider getting food from a local restaurant that needs the support)
Shift money as needed
Depending on your situation, you might find yourself with some unexpected expenses—like a babysitter if schools are closed. In addition to tightening up optional spending (like entertainment), remember that this is exactly what emergency funds are for—so if you have one, don’t hesitate to use it.
On the flip side, if you have a reprieve on certain expenses (like spending less on gas because you’re working from home), tuck that money into your emergency fund (or start one now!) so you’ve got a sense of security.
Going into debt should always be a last resort, so use your credit card wisely. If you absolutely need to charge a few things in a pinch, consider making a plan for paying off that debt when your finances allow.
Save on entertainment (and stay connected to friends)
Find creative ways to have fun when your plans have to change. The money you save on going out can bolster your budget or emergency savings—and keeping in touch with the people you love makes weathering any storm less stressful.
- Concert canceled? Create a virtual music party—ask everyone to contribute their favorite song to a shared Spotify playlist (and have a video chat dance-off if you’re anxious to bust a move)
- Happy hours curtailed? FaceTime friends for a remote wine night (bonus: the drinks are cheaper!)
- Curbing your travel plans? Plan a staycation full of fun activities you never have time for, like a movie marathon, a tour of your city’s parks, or a home spa day
- Movie theaters gone dark? Use the Netflix Party extension for Chrome for a virtual movie night with friends from afar
Lend a hand if you can
Mr. Rogers said it best: “When I was a boy and I would see scary things in the news, my mother would say to me, ‘Look for the helpers. You will always find people who are helping.’ ”
If you’re lucky enough to have extra money in your budget, using it to help those who are struggling is a great way to ease suffering for others—and reduce your own sense of helplessness at the same time.
- Food banks and services for the houseless are in especially dire need right now, so donating to such organizations can make a big impact. Find your local food bank here
- Some organizations (like the Restaurant Workers’ Community Foundation, the Sweet Relief Musicians Fund, and GoFundMe.org) have set up funds to help people disproportionately affected by the coronavirus, as have many cities and states. Search online for initiatives in your state if you’d like to contribute locally
- If you use delivery or ride-sharing services, tip as generously as you can. Gig workers are being hit especially hard if you have a few extra bucks, share the love. (And opt for no-contact delivery when available to help both you and your delivery driver stay safer)
- Spend your money with companies that have publicly committed to ethical practices that help their employees and consumers
- Buy from local small businesses whenever possible, especially those hit hardest, like restaurants, theaters, and small shops. One way to support your favorite spots when you’re not going out is to buy gift cards—they’ll benefit from the revenue now, and you’ll have some fun to look forward to in the future
Take control to cultivate calm
Focusing on your budget right now can help you feel more in control of your finances in the midst of uncertainty. If you’re feeling the all-too-common urge to shop online when life feels stressful, here are some ways to make curtailing extra spending easier.
Try to keep in mind that the current tumult, while distressing, is temporary; the world tends to weather disruptions and return to normal again at some point. We hope these tips will help you find your footing right now—and work toward being prepared for future ups and downs.
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Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: We do our best to make sure information is accurate as of the date of publication, but things do change quickly sometimes. Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner bank, BBVA USA, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. Individual situations will differ; consult your favorite finance, tax or legal professional for specific advice. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.