Create a Monthly, Zero-Based Budget
If you don’t already have a written budget, now might just be the time to start one. Writing down your budget for each month can help you gain an understanding of exactly how much cash you bring in versus how much you spend.
A zero-based budget is a type of budgeting where your monthly income minus your monthly expenses equals zero. That doesn’t mean you have zero dollars left over for savings. In a zero-based budget, savings are considered part of your expenses — something you plan for each month. A zero-based budget simply means that zero dollars go into or out of your bank account without being accounted for. It helps you give every single dollar of your income a purpose, from utilities and savings to debt repayment and emergencies. You can find more detailed advice on how to make a monthly zero-based budget here.
Make a Contingency Budget
After you’ve developed a monthly budget based on your usual expenses and income, it may also be helpful to create a contingency budget. A contingency budget will help you determine your absolute bare-minimum needs in the event that you lose income or unexpectedly incur more expenses.
In a contingency budget, you’ll want to cut out anything that isn’t necessary to keep a roof over your head, your utilities on and food on the table. Consider cancelling your cable subscription, for example, or minimizing dining out (or in this case, carry-out). If you’re having a hard time figuring out what exactly you can eliminate from your budget, here’s a list of a few things you can cut from your spending each month.
Even if you don’t need to make cuts to your spending right now, having a worst-case-scenario budget may help put your mind at ease. If your current situation is stable, you can also use a contingency budget to help cut some expenses and increase your savings.
Be Upfront About Bills and Payments
If you’re having difficulty paying bills, loans or credit card debt because of COVID-19, one option may be to contact your lenders or servicers and let them know about your situation. They may be able to offer you some relief by allowing you to delay payments, waive late or overdraft fees, or adjust your payments.
When you contact your lender, your monthly written budget will come in handy, as you’ll need to be prepared to discuss how much you are able to pay, your income and expenses, and when you’ll likely be able to pay regularly again.
Learn the Basics of Virtual Banking
Before the pandemic, you may have gone in person to the bank to manage your finances. But these days, most banking can be done online or through a mobile app, helping you stay home and practice social distancing.
If you’re not already familiar with the basics of banking online, now is the perfect time to learn. Many banks allow you to transfer funds, deposit checks, view your transactions and check your balance all from the safety and comfort of your own home. Read more about how to begin online banking.
Protect Your Retirement
If you haven’t yet retired, you should still continue to plan for the long-term — and that may look different than usual right now. You may need to pause or make smaller contributions to your retirement temporarily. Either way, it’s likely better to avoid withdrawing from your retirement funds unless it is absolutely necessary.
With the CARES Act in place, rules about withdrawing from your retirement funds and IRAs are now different. These rules will change as the pandemic develops, so it’s important to stay informed of the current legislation. Before touching your retirement accounts, use your emergency fund if you have one.
Stay Away from Scams
This is a confusing and stressful time for many people, and fraudsters are taking advantage of it. Coronavirus scams are rampant, and it’s important to be careful who you trust with your financial information. Scammers are currently targeting seniors with Social Security-related scams, COVID-19 charity scams, offers to deliver groceries or goods, and even scams having to do with fake vaccines and air filters. They may even pretend to be one of your relatives on Facebook or other social media.
One of the biggest tell-tale signs of a scam: the fraudster refuses to give you time to research their organization or offer. If someone calls, emails, messages or approaches you without solicitation, it is OK to tell them you need to look into your options first and will contact them later. If they pressure you to act immediately or take action right away — without giving you time to research — politely decline.
More Resources for Seniors During COVID-19
There are many resources available for older adults who have been affected financially during the pandemic, such as the Consumer Financial Protection Bureau and the National Council on Aging, and the National Institute on Aging. Search online and you may also find local resources in your city or state.
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