Using the COVID-19 Quarantine to Develop Better Financial Habits
Whether you’re still hunkered down in your home or just spending less time out and about since the coronavirus pandemic, chances are you’ve found yourself with some time to kill. And you can only binge watch so many movies and television series. So, if you’re not using this newfound time to learn a new language or work on your great American novel, why not use some of it to develop something that may actually pay off once things get back to normal?….whatever “normal” turns out to be. Why not take this opportunity to begin developing better financial habits?
Here are a few things to consider doing that could set the tone for better financial habits going forward.
1. Check Your Credit
The information that’s in your credit reports could be costing you money and causing you to miss out on credit opportunities. If it is painting an inaccurate unfavorable picture of your credit history and behavior, you may be offered higher interest rates and less favorable terms when you apply for credit. That’s why it’s important to regularly review your credit reports from all three of the major credit bureaus to make sure the information contained in them is accurate and up to date.
By law, you are entitled to a free copy of each of your credit reports every year. What better time than during quarantine, when you have some free time, to download and review yours? You can download them in minutes from AnnualCreditReport.com and go through each one at your leisure. In fact, because of COVID-19 concerns, all three credit bureaus are now offering free weekly online credit reports through this website through April of 2021, so you can check your reports for any changes on a regular basis.
Should you find any errors or inaccuracies, it’s important to dispute them as soon as possible. This infographic should point you in the right direction on how to go about disputing them.
2. Audit Your Expenses & Expenditures
One of the best ways to keep track of your spending and to find opportunities for freeing up funds is to review your expenditures regularly. Have you suspended or canceled a gym membership you can’t use during quarantine? Are you subscribed to, and paying for, three streaming services when one would probably suffice? Have you been fighting boredom by ordering things online that you don’t really need?
A thorough review of when, where, and how you’ve been spending your money—especially if that money is now much harder to come by—could prove to be beneficial. If you uncover expenditures or service you don’t deem necessary, cut them or cancel them. Tough times require tough decisions—especially if you need to free up funds to weather the pandemic storm.
3. Develop a Debt Strategy
It may be counterintuitive to consider tough times an appropriate time to develop a strategy for dealing with your debt, but making tough decisions when you’re seeing your financial picture clearer actually makes sense. If you’re wondering how you’re going to make ends meet, and the debt you’re carrying is a major expense, well, that may be the impetus you need to make, and stick to, an effective strategy for repaying your debt.
If you can’t pay off any of your existing debt because you’ve lost a source of income or don’t have the available funds, then it’s probably time to contact your creditors to discuss making arrangements. Many companies already have plans and programs in in place to help their borrowers. Those who don’t may be willing to work with you once you explain your situation.
If you can only afford to make the minimum required payments on your debt, go ahead and do so, but start developing a debt-reduction strategy to implement when times are better. The longer you simply make minimum payments, the more in interest you’re going to pay, and the longer it’s going to take you to pay off the outstanding balance.
If you still have a steady income and you’ve managed to cut other expenses after a thorough examination of your expenditures, consider applying some of those newfound funds towards your existing debt. And avoid taking on any new debt during this time. It may be tempting to carry a balance on your credit card just in case you run into other unforeseen expenses, but it may be a better financial decision to pay your balance in full. After all, if you’re being charged an APR in the twenties on that balance, there aren’t many places where you can earn a 20 percent return on any money you hold on to by making only the minimum payment.
4. Explore Ways to Make More Money
If you’re out of work, then finding any job to help make ends meet may be more than enough to concentrate on for now. But if you’re still employed, this could be a good time to explore possibilities to increase your income.
Are there employment opportunities available now that may not have been earlier? For example, as dining and shopping in has become more of the norm, the demand for delivery workers has greatly increased. Is this something you might want to do to bring in more income? Or perhaps now is the time to figure out how to monetize a hobby you’ve had for some time and actually get paid for doing something you’d willingly do for free?
People sometimes only focus on cutting expenses to save more money. But earning more income is also an effective strategy. Ideally, you’ll figure out a way to do both.
5. Research Ways to Put Your Money to Work for You
You may not have any extra money during these tough times, but there’s no better time to consider what you’ll do with your money once you’re back on your feet. Was your money just sitting in a low-interest-bearing savings account before the pandemic? Well, perhaps it’s time to consider better places to keep your money to earn more. Perhaps a high-yield savings account? Or a certificate of deposit (CD)?
Never mind if you don’t actually have any spare cash at the moment. Do the research and legwork now so you have a plan in place once money starts flowing in again.
6. Increase Your Financial Knowledge
Spend some time learning about financial things you never had time for before. Read an investing book and develop an investment strategy. Review investing and financial articles online. Learn the differences between a certificate of deposit and a jumbo CD.
Again, you may not have the funds to put your learning into practice at this time, but developing a good financial base and being able to speak the language of money and finance should only make life easier for you when you get the funds to start investing.
7. Embrace Online and Mobile Account Management
How long have you been putting off setting up online account access? Or downloading a mobile banking or credit card app onto your smartphone?
Well, now you should have a few minutes to do so, which will likely save you all kinds of minutes down the line. It could also make your life easier during quarantine. For example, if your banking mobile app allows you to take and upload pictures of checks to deposit them, that saves you a trip to the bank and minimizes contact with others. And trust me that, once you’ve deposited a check this way, you’ll never want to wait in another line to see a teller—drive-through or in person!
Set up your online credit card account and make future payments online instead of mailing them in. Do you keep missing or making late payments with certain companies? Set up auto-pay with them, or through your bank, and be on time, every time with all of your payments.
Once you actually take the time to go online or handle things through a mobile app, you’ll wonder why you continued to do things the old-fashioned way for so long.
Finances can be stressful in the best of times, but even more so during a pandemic. But if the pandemic is offering you time you never imagined you’d have, why not use it to pave the way for better finances down the road? What you start to practice during the worst of times should carry over into the best of times. And better times are most certainly on their way.