Due to the coronavirus pandemic, emergency savings are crucial more than ever.
Governments worldwide issued national lockdowns to mitigate the contagion. They mandated that most businesses halt their activities, especially those that involved physical interaction.
As a result, millions of people were laid off or furloughed, needing alternative sources of income.
Since most people lost their livelihoods, they drastically reduced their spending. Consequently, it weakened national consumption and further strained business profits.
Soon, companies started filing for bankruptcy en masse, exacerbating the massive number of job losses.
Now, the general populace must tightly hold on to their emergency savings, if any.
More importantly, you’re probably one of them.
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What to Do if You Have No Savings?
Unfortunately, you might not have extra money set aside.
After all, you probably had trouble juggling expenses even before the pandemic. Maybe you had numerous bills every month, but you struggled even to meet minimum payments.
Thankfully, there is always something you could do if you don’t have emergency savings.
First, tighten your budget temporarily by reducing your expenses.
We are in the middle of a global economic downturn, so you must efficiently manage your finances. Even if the coronavirus disappears, the economy will take years to recover.
Everything would continue to cost more, yet most people won’t start earning again soon.
If you’ve run out of emergency savings, you may want to spend less on necessities. This means only purchasing an adequate amount and using more cost-effective alternatives.
For example, make sure you won’t waste any of your groceries. If you have a preferred brand of canned food, then buy the more affordable alternative.
You must refrain from buying unnecessary stuff, so no new smartphone or car for a while. Only spend when needed, so you have more for more important expenditures.
Start Selling Unused Things
Another method you may follow is selling unused or unimportant knick-knacks in your home.
Nearly every household has an attic full of stuff you may display in your garage sale. Take them out, dust them off, then show them outside for potential buyers.
What’s more, you may sell them on Amazon or eBay to reach more customers. These websites allow you to get people across the state who may want your unused stuff.
These methods could help you save money for emergency savings quickly. Moreover, you may cover some monthly expenses and bills with this tactic.
Negotiate with Bills and Lenders
Fortunately, the government understands the people’s plight, so they’ve signed the CARES Act into law.
President Trump signed this relief bill on March 27, 2020, that helps the American people get through this crisis.
For example, it stipulates that all student loan payments must be suspended until December 31, 2020. What’s more, it included the Paycheck Protection Program for small businesses.
Moreover, financial institutions understand that their clients may have run out of emergency savings. Banks know their borrowers will struggle to keep current with payments, so they each have their Numerous online services that could help you get started at no cost.
Plan for the essential aspects of your prospective business, such as manpower, equipment, and materials. Set realistic goals for your side hustle, and check if you already have some of the items it needs.
From online transcription to home care services, you’ll find numerous side business ideas on the internet.
For savvy investors, keeping funds in high-yield savings accounts may have added to their emergency savings.
High-yield savings accounts pay 20-25 times higher annual returns than typical savings accounts. Simply put, these can earn you more money to replenish your emergency fund.
These usually share the same bank with their checking accounts, facilitating electronic transfers between them.
Alternatively, you may put funds into money market accounts for more considerable gains. They usually allow people to access their money more conveniently than high-yield savings accounts.
This pandemic taught everyone worldwide how emergency savings act as an essential safety net. People who frequently saved small amounts may have accrued enough to shoulder unexpected expenses during this pandemic.
However, it’s never too late to improve your personal finance. Follow the steps we’ve mentioned so that you could maintain your daily necessities.
More importantly, use these tips to start saving for an emergency fund. This coronavirus crisis made us realize how vital savings are, so apply what you’ve learned.
For more financial planning tips, please visit this website.
Learn More About Emergency Savings
How do I rebuild my savings?
You may replenish your savings by selling unused items in your home. Reduce your daily expenses and stop buying unnecessary stuff so that you could set more money aside. Also, you may invest in a high-yield savings account that could net more money for savings.
How much should your cash cushion be in savings?
Usually, financial advisors recommend having three to six months’ worth of living expenses for emergency savings. However, your financial situation may require you to set aside more money.
What is a fair amount to have in your bank account?
According to Dave Ramsey’s daughter Rachel Cruze, having an emergency fund of $1,000 is a good rule of thumb. Still, she recommends assessing your financial situation so that you could build a suitable emergency fund. For instance, you may need to save more if there’s only one income earner in your family.
What to do with extra savings?
You may completely repay credit cards and other debts using the extra cash. Alternatively, you may set a more ambitious savings goal by investing in bonds or stocks.
Where is the best place to keep your emergency savings?
Your emergency savings fund must be easily accessible in an account with a debit card or check-writing privileges. You might be tempted to dip into your savings if it’s easily reachable needlessly.