Until recently, an additional $600 per week in federal unemployment benefits helped provide some relief to the millions of Americans experiencing pandemic-related job loss. Those benefits expired at the end of July. Moving forward, as of an executive order, the amount Americans can expect has been halved: $300 a week — and they will only receive it if and when their state implements the payment of the money.
Everyone’s financial situation is different, but in the age of COVID-19, there’s uncertainty on all fronts — for many, the answer is cutting down on spending and hunkering down on saving. “Some of the tried-and-true budgeting hacks are still relevant, but given the COVID situation, I think there are specific things that we all should be doing,” says Kim Bourne, certified financial planner (CFP) with Playfair Planning.
If you’re worried about tightening your budget even further until benefits start up again, we’ve got some advice for how to get you through until the next plan (or your next job).
Consider your money mindset
Taking a look at the way you think about money — and what you spend it on — can be a critical step when it comes to successfully adjusting your budget. For your best chance at success, change your mindset and then implement the logistics, says Bourne.
First, dedicate time to thinking about what’s necessary in your spending. One useful tool: Printing out your bank statements from the past month and noting which purchases you might regret and which were especially useful. Try to pull out patterns and trends. Once you identify what you consider the most necessary, ask yourself why — and keep asking “why” in case the critical thinking changes your view, says Bourne. “COVID has forced us to really think seriously and deeply about what is necessary, and obviously that manifests itself with money as well,” says Bourne.
Put recurring expenses on the chopping block
In the midst of a pandemic, our daily lives have changed significantly, which changes what we need to spend money on — chances are you’re now shelling out money every month for subscriptions, scheduled payments or other recurring charges you don’t currently need. Go through your bank statements or use a service like Trim or Truebill to identify everything you’re being automatically billed for, then cancel whatever you no longer need.
For everything else, make a call to ask about a discounted rate or even putting payments on hold for an extended period. Many companies are offering special programs and lowered rates to get people through this time — and even in the case of student loans or mortgages, everyone should “definitely should get on the telephone and see what forbearance they might be eligible for,” says Bourne.
Schedule a consultation with a financial professional
Many financial institutions, accounting firms, or CFPs offer free consultations, and many local chapters of the Financial Planning Association (FPA) have pro bono programs.
After you schedule a time to talk, consider asking about how COVID-19 tax relief and other measures, like some included in the CARES Act, could benefit your individual financial situation. For instance, experts don’t recommend tapping retirement funds, but Bourne says it’s worth noting that those who have been adversely financially affected by COVID-19 can access up to $100,000 from retirement plans without the 10 percent penalty for early distributions and make repayments, if needed, over the next three years.
With Hayden Field