During the onset of the global COVID-19 pandemic, more than 30 million Americans filed for unemployment. The sudden and unexpected loss of financial stability led to a tremendous amount of stress, anxiety, and concern for many households. Uncertain what the future could bring, many of us now share a renewed focus on building positive saving habits and emergency preparedness.
After emerging from an economic recession, you may be wondering what you can do to get your finances back on track. We gathered the best advice from our specialists to develop a guide that will get you started on the road to financial recovery. With our four steps, you’ll be able to formulate a plan that will leave you feeling confident going forward.
1) Catch Up on Bills
If you found yourself having to extend payment dates, the first step you should take is to get a complete picture of your outstanding balances. Contact all of your bill providers—this includes credit cards, utilities, car payments, etc.—to determine the current balance on your accounts. Be sure to ask about any late fees or additional charges that may have been applied during that time.
Once you know how much you owe and to who, start to prioritize your payments. If you’re unable to pay individual balances in full, ask to speak to a representative to see if alternative arrangements can be made. Remember: during a recession, there are millions in similar financial situations, so it is worth inquiring about additional extensions or payment plan options.
2) Readjust Your Budget
Once you take care of your bills and outstanding debts, the next step is to reevaluate and adjust your monthly budget. Review the remainder of your current expenses and see where you may be able to either eliminate or cut back in certain areas. For example, if you find yourself working remotely in a new job, you may be surprised at how much you can easily save. Common onsite employment-related expenses like dry cleaning, gas, car maintenance, daily coffee, and lunch outings all add up!
After you’ve adjusted your monthly budget, you’ll want to keep yourself organized and on track. Fortunately, there are budgeting apps such as Mint or PocketGuard that make this task easy. Prefer a more traditional approach to managing your money? Pen and paper or a spreadsheet work just as well! The point is—it doesn’t really matter how you keep track of your budget, just as long as you’re doing it.
3) Save Consistently
Once your budget is prepared, your next step is to review your savings. While it’s always a good idea to have a rainy-day fund, during times of economic uncertainty, it’s even more critical to have money to fall back on. The general recommendation is to save at least 10% of your monthly income. And while this approach may work well for some, it’s important to remember that this is just a guideline and that your immediate expenses will impact how much you are able to save.
When it comes to saving, no matter the amount you can afford, consistency is key. Of course, the more money you contribute, the faster you’ll be able to build your emergency fund. Over time as your savings account grows, you’ll rest easy knowing you’re financially prepared for whatever life throws at you.
4) Take Control of Credit Card Debt
If you found yourself accumulating more credit card debt than you had hoped to during a time of financial hardship, then a personal loan may be a viable option for getting your finances back on track.
Using a personal loan to pay off your credit cards can help you save on interest and lower the overall balance of your existing debt. You’ll also see improvements in your credit score by reducing your credit utilization ratio and establishing a positive payment history.
We hope you found our tips to be just the guidance and motivation you needed to jump-start your financial recovery plan. As you begin to look towards the future, if you find that you could use some added financial assistance, consider a personal loan from Credit Direct. Apply online in minutes to check offers with no effect to credit score.