While our nation and the whole world are battling the COVID-19 pandemic, many of us are starting to learn new financial lessons caused by these unprecedented times.
Millions of people were put in a difficult situation, but the government reacted quickly by passing the Coronavirus Aid, Relief and Economic Security (CARES) Act, which provided financial relief to families, individuals, and businesses.
We have witnessed that we never know when the unexpected might happen, when our lives may be turned upside down, and whether anyone will be able to help us. Therefore, the best thing we can do is to be prepared.
Read on to find out which financial lessons this coronavirus pandemic has taught us.
One of the top financial experts’ recommendations is to have an emergency fund. The general rule is to have at least 3-6 months’ worth of living expenses saved.
Unfortunately, not many Americans understand the importance of building an emergency fund. This has been proven by a survey conducted by the TIAA Institute, which showed that financial knowledge ranks lowest in the area of comprehending risk.
However, not many people have been through a situation such as the current one and we don’t commonly see so many individuals file for unemployment benefits. So our answer to the unexpected should be emergency savings. Divert money into your bank account whenever possible, and if you already have one, keep building it up.
If you’re seeking financial independence, you have to work hard to eliminate any debt you have.
It seems that debt is cheap now; interest rates are low because companies are trying to extend credit so they can sell more inventories and remain in business. However, it will be better for you if you start eliminating your debt.
If you’re not in a good financial position to eliminate debt right now, look into refinancing your mortgage or your student loans to a lower interest rate. Or, consider transferring your credit card balance to a 0% balance transfer credit card.
There are options for you to reduce monthly payments, thus saving more money each month and eliminating your debt more quickly. It’s important not to let debts kill your financial dreams, so do everything you can to repay your debts as quickly as possible.
Be ready, don’t panic
We’ve witnessed the consumer panic-shopping at the start of the pandemic. Yet, the forward-thinking consumers have learned a lesson: they will start to accumulate a reasonable amount of essentials should we experience a lockdown or any other unexpected situation.
Now, many people have gained awareness about unpredictable events and will embrace the attitude of sufficient stockpiling. This doesn’t mean you need to hoard, but to prepare and have a sufficient amount of essential supplies in case other people begin panic shopping if an unexpected event occurs.
Consider researching shopping strategies where you can actually save money such as using online coupons, using products more moderately, and so on.
The COVID-19 pandemic has reshaped everything we once knew as normal, but we have to be quick to adapt and continue with our lives. In the face of an uncertain future, we need to adopt new habits to be financially stable.
Hopefully, many people will see the benefits of being financially prepared if anything out of the ordinary happens. Moreover, people should learn how to keep a budget so they know where their money goes.
Financial lessons learned during the COVID-19 pandemic should be adopted by everyone in order to stay safe and financially stable in the future. With over 133 years in the financial industry, Prudential Bank has put their customers on the fast track to financial success. For more on our services and to get in touch, visit us here.