COVID-19 pandemic is causing financial anxiety all around the world. Here is how you can save money during a lockdown and get your finances on track.
The COVID-19 pandemic has hit many Americans hard financially. With layoffs and business closures, it reminds us all of the importance of having a nest egg for crisis periods. On the other hand, for those lucky enough to have an income still, it is also giving a unique opportunity to save money. The lockdown has cut out many of the regular expenses people had, especially in bigger cities. As bars, shops, restaurants, and salons close, we find ourselves staying more time at home or doing simpler (and free) activities, such as exercising in the park or biking. Liking it or not, the disruptions caused by the coronavirus outbreak are making us spend less. And also causing fear about spending too much.
For now, the economic impact of the coronavirus pandemic is far from being clear. Economists say that the pandemic could clearly cause a recession in the United States, but it is still quite hard to predict the most likely scenarios.
Given such uncertainty, it is understandable that most people start to worry about their personal finances. In fact, according to CNBC, 77 percent of Americans report feeling anxious about their financial situation. In another survey conducted by the Time, it was found that nearly three in 10 Americans’ financial situation (29 percent) has been negatively impacted since the pandemic began.
Many Americans have already experienced a sudden drop in income, freelance work disappearing overnight, or even a layoff. Others, while maintaining their jobs, worry about being behind on payments or seeing their business/company collapse.
Besides debt and loss of income, most Americans are worried about their lack of savings. Luckily, many are starting to realize that a lockdown can be an excellent opportunity to develop a savings strategy. If you haven’t thought about how to do it yet, we will share some fundamental tips with you. These techniques might not be enough to solve the financial anxiety you are feeling, but they will surely help you make your finances less stressful.
Even during normal times, it is a good idea that you keep track of your monthly spending. Now, in the midst of a sudden pandemic that is changing the way we work, socialize, and consume, this is even more important. To get your finances on track, start by considering your usual expenses (like mortgage or rent, utility bills, education, groceries, etc.) and establish a realistic monthly budget.
Then, keep a detailed list of your spending habits. Soon, you will notice where you are spending too much and find new opportunities to save. Having your daily coffee at Starbucks or spending too much on new books are habits that can easily be detected and changed.
Luckily for you, when it comes to budgeting and keeping track of spendings, technology is on your side. Nowadays, there are many apps you can use to trace your daily expenses and get recommendations on where to decrease your spending. MoneyPatrol and Personal Capital are two great options. Both of these apps can help you figure out the best financial strategy for your circumstances while allowing you to review your spending and set monthly goals.
All around the world, many people are experiencing great difficulties due to the outbreak of coronavirus. The U.S. government has, to date, sent out over 160 million Economic Impact Payments to Americans in need. To find out how to get emergency financial help from the government if you have been affected by the coronavirus pandemic, visit this governmental page. You can also visit the U.S. Department of Labor page for resources to help workers and employers respond to COVID-19, or find the current unemployment benefits near you on this governmental page. If you are concerned about healthcare, there are also many identities you turn to for help. For those experiencing a lapse of employment, applying for the COBRA Continuation Coverage can be an option to consider. Medicare and Medicaid are also good alternatives for low-income individuals and families.
We have all seen this happening, mostly in the early stages of the pandemic. But was it ever necessary? Absolutely not. In the United States, governmental identities have always assured a regular and seamless supply of essential items.
Our take? Buy enough groceries for a week and avoid hoarding. Apart from anything else, hoarding is a financial mistake. By doing so, you keep buying things you won't necessarily need, ending up spending way more than necessary. Remember: food continues to be produced, processed, and delivered despite lockdowns, so there is really no need for panicking buying.
Finally, if you are truly focused on saving money during the pandemic, it is quite important that you practice smart shopping. Give priority to cheaper supermarkets and inexpensive brands. Make small changes in your buying habits. Buy frozen food (it is just as nutritious as fresh produce and generally less expensive), consume less meat, and get creative with your leftovers. You can also take advantage of digital coupons and keep track of the weekly in-store promotions.
It might not look like it, but saving on your grocery bill can be a crucial step to save money during a lockdown and get your finances back on track.
All around the world, the pandemic is creating new momentum for cycling and walking. And that is a great thing. To begin with, trading in your car for a bicycle or pair of walking shoes is, at this point, way safer than using public transportation. As we know, there are several COVID-19 related risks associated with public transit. Enclosed, crowded spaces are the perfect breeding ground for the virus, which is why it is advisable to avoid them whenever possible.
But there is more. Besides being safer, biking and walking represent an easy way to increase the amount of exercise you get. The health benefits have been documented for decades. According to several studies, spending one hour a day on a bike can reduce your risk of death by 18 percent. That is because cycling often reduces the chances of suffering from cardiovascular issues, developing cancer, or having a stroke. And it doesn’t end there. Bicycling and walking are also incredibly beneficial for the mind. People that bike or walk frequently tend to suffer from depression, anxiety, and other mental health issues less than those who don’t.
As you can see, there are many health benefits (not to mention environmental ones) in choosing a bike over a bus. Financially-wise, biking, and walking are far cheaper than buying, for instance, a public transit monthly pass. For beginners, cycling has a high up-front cost, but it will compensate soon enough. For example, in cities like New York and San Francisco, 2 to 4 months using a bike is enough to make up for a yearly pass.
During uncertain and stressful times, it is essential to keep the energy levels up. Likewise, it is crucial to develop new habits and hobbies. And what is the obvious answer to unite these two needs? Cooking! During the first lockdowns, people all over the globe started to spend more time in the kitchen. From banana bread to the deliciously-looking dalgona coffee, many trends appeared and spread across our kitchen counters. And what many people found is that, by cooking more at home, a good percentage of money can be saved.
While it is important to support local businesses through this crisis, if your goal is to save money during a lockdown, cooking is a must. On average, it is almost five times more expensive to order delivery from a restaurant than it is to cook at home. Popular take-out meals like Pad Thai, Pasta Bolognese, or Soba Noodles are considerably easy to make at home and can help you save up to 80 percent per serving.
But there are many other benefits to cooking at home. You can use healthier ingredients, set better portions, avoid food allergies and intolerances, and, very importantly, cultivate a hobby that will make your household happier and healthier. Have you and your family ever tried to make pizza or cookies from scratch? This could be the perfect occasion to try!
You might not realize it, but memberships, subscriptions, and other recurring card charges can cost you a lot of money by the end of the year. Think about it and make some calculations. Between Netflix, Spotify, Amazon Prime, BirchBox, HelloFresh, and that gym membership that includes access to a bunch of different amenities and services, how much are you actually spending?
People don’t realize the actual costs of these services because they only focus on what it costs a month. Practically no one thinks about what it costs over a year - and even less over a decade. If you consider all your monthly recurring expenditures, you will surely find many opportunities to save. Going to exercise in the park instead of going to the gym, or sticking with one streaming service instead of three, is an excellent way to start.
And if you don’t know where to cut, worry not. Subscription monitoring services like Trim and TrueBill are here to help you. These apps analyze your credit card and bank account transactions for subscriptions and flag the recurring charges. Then, they help you unsubscribe from unwanted services - especially those that seem difficult to unsubscribe from.
If you want to save as much money as possible during the lockdown period, you must find the best saving process for your circumstances. Creating or growing a savings account is an invaluable life skill. You must learn to do so efficiently, without going overboard. Our advice? If you are starting a savings account, start modestly. Then, if you can afford to live without the money, increase the amount you put into savings. It is, after all, a matter of adapting to a new budget.
We also recommend you to keep your savings in a separate account and even with an entirely different financial institution. Remember that choosing the best savings account to store your money is almost as important as how much you save. So shop around, compare offers, and pick the one that better fits your goals. If you are interested in a long-term savings account, for instance, a CD (Certificate of Deposit) is probably the best option. If your priority is to save for retirement, then you should look at IRAs (individual retirement accounts). No matter what you choose, the important thing is that you treat this account as “off-limits” and that you only dip into it as a last resort.
Finally, investing in life insurance can also help you save, especially in the long run. Permanent life insurance with a cash value savings component, for instance, might be a great option to consider.
In the midst of a global pandemic, life insurance is getting more popular as people realize how useful it can be to face uncertainty. After all, this product aims to increase the families' financial security, no matter what life throws at them.
If you are considering this option, Insurance Supermarket is here to make the process more accessible and straightforward than ever. Our main goal is to make applying for life insurance as easy and painless as possible for all Americans. That is why our insurance policies have a simplified application process that doesn't require face-to-face meetings, complicated paperwork, or medical exams. No matter your health status or personal circumstances, we can guarantee you the coverage you and your family need.
Written by Diane Taes