Cash Flow Considerations During Coronavirus
As we are all well aware, we are currently facing unprecedented times in our world today. The pandemic is affecting all of us in one way or another, and many have experienced a change in their financial situation. A life transition or life status change often triggers a review of your finances, and spending time with your monthly budget is a great place to start. The following are a few areas where you may consider making adjustments to help you maximize your monthly cash flow during coronavirus.
Because stay-at-home orders have many of us leaving the house less frequently, one expenditure that may be able to be reduced is your auto insurance. If you have multiple cars, some of which you may not be using, consider reaching out to your auto insurance company to inquire about reduced rates or cancelling your policy until we reach a point of travel normalcy again. Many companies are getting ahead of the curve on this trend and are offering discounted premiums at this time.
Student Loan Payments
For many, student loan payments make up a significant portion of their monthly budget. As part of the CARES Act, payments on federal student loans have been suspended until September 30, 2020, and interest on your loan balance will not accrue during this time. This can be an opportunity to free up extra cash flow if needed, or a chance to chip away at your your principal balance if you continue to make payments.
Your retirement contributions may be one aspect of your budget that can be adjusted whether you find yourself with an increase or decrease in discretionary cash flow.
If you are working and find yourself with extra cash flow, now may be a great time to increase the contribution rates to your retirement plans. By increasing your contributions, you also increase your purchasing power of investment assets; taking advantage of lower values can put you in a better position of owning a greater number of shares when prices recover.
On the other hand, if you find yourself with less than your normal monthly income, temporarily stopping retirement contributions can increase your cash flow and help you avoid hurting your financial health by building up credit card debt, for example.
Because retirement contributions are often processed automatically, it’s easy to go on autopilot and forget their impact on your monthly cash flow. Use this as a reminder to review your savings rates and adjust accordingly.
Focus on the Essentials
Uncertain times like these can take their toll on the most stable minds. If you currently find yourself out of work, focus on the essentials – paying for food, shelter, utilities, and transportation (if needed). Prioritizing your basic needs can give you some much needed peace of mind.
Cancel Unused Subscriptions and Memberships
Non-essential items like subscriptions and memberships can sneakily add up to be a significant portion of your monthly budget. Use this time to consider which ones you still actively use and which you don’t. Cancelling subscriptions such as gym memberships, magazines, public transportation, and even, yes, your wine subscription, can help free up monthly cash flow and ensure you’re not wasting money on services you don’t use.
Feeling overwhelmed and don’t quite know where to begin? Consider looking into services like Trim and TrueBill. These services use your credit card bill to filter out recurring charges from various subscriptions services. The companies then even go one step further in helping you unsubscribe to any unwanted services. Cancelling subscriptions through each respective company can be as easy as replying to a text message or through using their mobile app.
Additionally, a common place where subscriptions can “hide” is through in-app subscriptions. Depending on which software platform you use, you can review or cancel your in-app subscriptions through the Apple App or Google Play Store. For Apple users, go to settings > Apple ID > Subscriptions. For Google, click on your Google Play app > Menu > Subscription.
Furthermore, if you are currently experiencing hardship because of the crisis, consider reaching out to your providers to see if they are offering any payment deferral options. Internet providers like AT&T, Comcast, and Verizon are all willing to help subscribers who can’t currently pay their bills, as they would rather you defer current payments instead of canceling your subscription entirely.
If you are an essential worker, first, thank you for your service! Secondly, many businesses are offering special discounts at this time, and your hard work deserves to be rewarded – don’t be afraid to ask about their offers. We all thank you!
In summary, focus on the essentials and if fortunate, seek opportunities to take advantage of the current situation. Human resiliency will help us all get through these uncharted waters, one day at a time.