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Coronavirus: How to budget

Everyone has been affected in some way by the pandemic that struck this great country and brought the mightiest economy in the world to its knees. It is a tough time out there for many folks. Unemployment has skyrocketed to levels we never even thought possible a few months ago. 

In April 2020, the unemployment rate in America rose to 14.7 percent. The situation is far worse than that though. According to research, the actual unemployment rate hit close to 23 percent. This includes workers not looking for jobs as well as the underemployed.

If you are having to stretch your finances just like everyone else in these trying times, you may want to work out a tight budget. Of course, a check from the government for $1200 is more than welcome, but it won’t be enough to offset months of lost income and opportunities. The first step is to assess your current financial situation. Work out all of your income and assets versus expenses, liabilities, insurance cover, and things like that. 

Different people have different circumstances. Some have lost jobs or hours. Some have come out on top by working from home and cutting down on travel costs and other expenses. You can’t go out for an expensive designer coffee if the shop isn’t open. No matter what situation you find yourself in, a budget is essential during this period. 

It isn’t all bad news though. Some of your expenses may have lessened over this period. Allstate and American Family Insurance are giving back a total of $800 million to their customers after they decided that the decline in driving lessened risk and they did the right thing to provide their customers with a real financial break in these dark times. They aren’t the only company helping folks. Apple Card users were allowed to skip monthly payments without incurring interest charges. Not having to pay your monthly charge on your credit is a boon many would be glad for when cash gets tight.

Here are three steps for budgeting during coronavirus:

1. Work out all income vs. expenditure. That’s everything you get in against anything that goes out. Understand your current fixed and variable expenses.
2. Find out where you can cut costs. Contact your credit companies and find out if there is any relief offer during this time. You may be surprised to learn you don’t have to pay certain bills for a few months depending on the policy of the company. Find out if it’s possible to switch loans to a company at a better rate. Once you've done this you can see how much money you have in hand and how liquid you are. 

3. If you have an emergency fund in place, continue investments with whatever amount possible. 

 

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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