Eight out of 10 Americans have at least one big worry about their financial future due to the pandemic, according to a new nationally representative survey by Newsweek and LendingTree. Among their greatest fears: not being able to retire on time—if at all now; not being able to find or keep a job that pays well; and how long it will take them to dig out of the financial hole the pandemic and resulting economic downturn has put them in.
"For lots of us, the pain of uncertainty has become almost intolerable," says Plano, Texas financial planner Gretchen Behnke.
There is no denying that there is a lot to be stressed about these days when it comes to your finances—double-digit unemployment, dwindling federal aid, no comprehensive plan to contain the virus, just to name a few. But there are a few practical steps you can take now that will help you better weather the current financial storm and set you up for brighter days when they finally arrive.
Prep a Plan B
Whether you've already been laid off or anticipate you could be soon, having a strategy for how you'll cover costs if you lose your job helps restore some semblance of control over an otherwise out-of-control situation. Step one: Draw up a pandemic budget pared down to your essential monthly expenses, so you know the amount that's actually crucial to cover (apps like Mint or You Need a Budget can help). Next, see how much you'll get from your state's unemployment insurance program at Careeronestop.org (national average: $370 a week). Calculate how long your emergency savings will carry you and brainstorm freelance gigs that can help supplement those benefits.Pay for essential expenses with your credit card if you must, but avoid cash advances, which carry rates averaging 24 percent, a full eights point higher than the average rates charged for ordinary purchases. "If your total debt doesn't exceed about a third of your gross income, or target income, if unemployed, you'll be okay," says Gaithersburg, Maryland, financial planner Matt Bacon.
Carry a strong umbrella
Americans have finally gotten religion about saving for a rainy day now that they're experiencing an actual downpour. Almost 40 percent of the Newsweek/LendingTree survey respondents have been saving more during the pandemic than they were previously—and nearly half expect to keep up that habit once the economy recovers.How the Pandemic Will Change the Way We Manage Money ForeverREAD MOREAim to set aside enough money to cover three to six months of your living expenses, which you should keep in an FDIC-insured bank account that you can easily tap without incurring fees. Since February, the Federal Reserve says there has been a 56 percent increase in the money kept in checking accounts, which suggests that people are stashing their cash there, but a high-yield savings account is a better option. Recent interest rates on high-yield accounts offered by PNC Bank, CitiBank and CIBC Bank, for example, were 0.9 percent or more compared with zero or close to it on ordinary checking accounts. It's not a lot more money, but every little bit counts.
Cast a wide net
Hiring isn't dead, people are getting new jobs every day, even in a pandemic, but the search process is a lot harder, says Lindsey Pollak, author of Recalculating: Navigate Your Career Through the Changing World of Work.