5 Smart Financial To-Dos You Should Do Right Now.
We’re living in an unprecedented time, both medically and financially. With nonessential businesses unable to operate and many essential businesses operating with limited hours, the United States is in an economic recession that may surpass that of the Great Depression. Whether you’ve been laid off or furloughed recently or want to be proactive in such an uncertain time, there are steps you can take to mitigate your own economic fallout—starting with these five financial tips:
1. Create a New Budget and Adjust Your Lifestyle
Take the time to go through your most recent bank statements to see where your money really goes. Create a list of “need” finances, like rent, utilities, insurance, and food, and “want” finances, like Netflix, Starbucks, and eating out, and compare them against your current income. Once your “needs” are met, find alternatives for your “wants.” Trade Netflix for free streaming with commercials, like Kanopy, Pluto TV, Crackle, Tubi TV, Vudu, and Xumo. Try home-brewing coffee tips from the experts. Watch free YouTube cooking tutorials and make restaurant-worthy meals at home. With a little imagination, a new normal doesn’t have to be a bad thing.
2. Use Your Stimulus and Expanded Unemployment Wisely
Thanks to the CARES Act, eligible workers will receive a tax-free payment of up to $1,200. The same act also expanded unemployment benefits to provide an additional $600 per week through July 31, 2020. If you’ve received either or both of these benefits, make sure you use these funds wisely. If you’re fortunate enough to find yourself with excess funds after your financial obligations are met, resist the urge to splurge. Instead, put these funds in a savings account in the event you don’t find new employment before the extra $600 benefit ends and you’re unable to manage financially without it.
3. Ensure You Never Go Hungry
If budgeting and taking advantage of expanded unemployment insurance still leaves you unable to feed yourself or your family, you are not alone or forgotten. The Families First Coronavirus Response Act has expanded USDA food assistance and nutrition programs to allow states to offer emergency SNAP (Supplemental Nutrition Assistance Program) benefits and suspend its work requirements, among other updates. You can also use organizations like Feeding America, FoodPantries.org, and West Texas Food Bank to locate and visit your local food pantry/bank.
4. Examine Your Insurance Policies
From renters and homeowners to car and pet insurance, a relatively large portion of your finances goes to protecting what you value. While you need to carry certain coverage for legal reasons, you may be able to lower your monthly premiums and save some money on your insurance policies. Start by seeing if you can increase your deductible or remove optional additional coverage. Many car insurance companies are also offering partial premium refunds because people are driving less—or not at all—due to COVID-19. Call your insurance carrier to see if they’re participating.
5. Withdraw Penalty-Free Money from Retirement Funds
Typically, IRA and 401(k) accounts charge hefty fees for early withdrawals, but a CARES Act provision now allows you to take up to $100,000 penalty-free from your IRA or borrow $100,000 from your 401(k). This provision is intended for people who are experiencing substantial economic hardships, not as a way to access your funds early without penalty. Your retirement funds are there to finance the rest of your life once you stop working, so it is recommended that you only take advantage of this if you truly need to. If you do, make sure to strategize how to replenish these funds once you’re financially able.
The most important thing to remember during times like these is that we’re all in this together. FirstCapital Bank of Texas isn’t just a financial partner, we’re your neighbors too. If you’re experiencing a financial hardship or want to discuss your FCB accounts, we’re here to help–call your local branch today.