This week millions of people in America started receiving their share of the coronavirus “stimulus” funds from the IRS as part of the recently passed CARES Act. Generally speaking, people have already or will receive $1,200 per adult, and $500 per child/dependent living in a household. There are some exceptions to this of course.
But regardless of how much each person or household received, it has a lot of people asking how they should use the check the IRS has sent them. What should they do with this money? What should they not do with this money? And, how should I manage my finances in the middle of a sudden economic downturn and during a pandemic?
In today’s podcast, I want to do a little “thinking out loud” about this issue. Of course, as with everything regarding the subject of personal finance, personal finance is always… personal. Everyone’s situation is as unique as they are. But I’m hoping that if you are trying to decide what to do with the money that Uncle Sam sent you, that this podcast will help guide you in the right direction, as you juggle the difficulty of managing personal finances during these hard times.
Fundamental Assumptions Made In Today’s Podcast
- That the economic impact of the coronavirus will be drawn out for at least a year or two, and that it will be painful for many people.
- I am assuming you qualify for the stimulus check from the IRS.
- That you are working, or at least receiving unemployment benefits as a result of being unemployed because of COVID-19.
7 Tips For Managing Your Personal Finances During The Pandemic
- According to your ability, continue giving to your church, favorite local charities, and try to identify those in need to help them financially. Continue to lead a life of generosity.
- Save as much money as you can. Try to build up your emergency funds if possible. If you did not do this previously, now is a great time to do this.
- Consider taking out a personal line of credit to create an additional buffer between you and complete financial disaster. Use “other people’s money” before you burn through your own cash reserves, and to help temporarily smooth over any interruptions you have in cash flow.
- Make more strategic and targeted purchases. Many small and local businesses are suffering right now. Make a list of your favorite small local mom and pop restaurants and shops, and make sure you give them your business. If they go out of business, millions of jobs will be permanently destroyed, and will make the economic downturn even worse.
- Consider temporarily suspending your long term financial investments, including contributing to your IRA/401k. The crisis at hand is more immediate and of greater concern than your finances 30-40 years from now.
- Avoid major purchases (like a house or car), remodeling/home renovations, purchasing appliances, doing large landscaping projects, etc. This might be an exercise in futility and throwing good money after bad.
- If things get really bad for you, “kick the can down the road” and request forbearance or special repayment plans wherever possible when it comes to mortgage, rent, auto/credit card payments, medical bills, utility bills, etc.. While this will likely create its own long term issues, you will at least have the opportunity to live and fight another day.
- Everything you should know about mortgage forbearance – A great resource if you are currently struggling with your mortgage due to COVID-19.
These opinions are my personal opinions, and are not reflective of my employer or any other person. These opinions are offered merely as food for thought and helpful suggestions. Before taking any advice here, please consult with a certified financial professional, accountant, or lawyer.