In times of conflict and uncertainty, there are always many questions. Recently we all found ourselves in a unique situation as we reacted and coped with a pandemic. While this is a special case, crisis can happen at any time. During hard times it is better to prepare rather than panic. Below are a few things to keep in mind when it comes to finances during periods like these.
It’s important to remember that even in a crisis, credit scores still operate the same as usual. It’s managing your credit that may require a different approach. As funds start to deplete, you may need to be more and more financially strategic to position yourself for an easier recovery.
One of the most important parts of financial planning is knowing and setting a budget. Being aware of exactly where your money is going and how much is essential during hard times. First determine how many funds are going towards essentials like rent, utilities, and groceries. Then cut costs wherever you can. Instead of dipping into emergency funds right off the bat, try to look through your subscriptions and cancel any unnecessary charges like streaming services, mobile paid apps, or memberships you can temporarily do without. Zero in on those that are the costliest and cancel or postpone them if possible. Once things normalize you can always resume these services.
If you realize you might be late in paying something before its due, the best thing is to take action as early as possible. Reach out and speak to a lender right away. Many lenders have programs to specifically address times of hardship and will likely be willing work with you on what your options are. They can help guide and educate you throughout this process
The last thing to remember is to check and understand your credit score itself. Credit scores may seem like a big mysterious number but they’re essentially a grade you receive based on your reliability as a borrower. There are several factors that go into determining your score but the primary two are whether you’re paying on time and how many credit limits you use. Also note that due to the pandemic some lending companies such as Equifax, Experian, and TransUnion are offering free weekly online reports so you can know and manage your situation.