Navigating a Financial Crisis
If you need financial help during the COVID-19 crisis, please contact your local 211.org for a list of available resources in your area. If you feel like you may have the disease, please refer to guidance from the CDC. Read below for advice on how to navigate a financial crisis from one of CARE’s partners, CESI. For CARE’s response to COVID-19, please click here.
As the COVID-19 pandemic dominates the news, it also continues to impact the everyday life of individuals and families. There are many concerns to consider in these days, but for millions of Americans, their financial worries weigh the heaviest. It’s hard to escape the reality that the economic impact of this crisis will be enormous, especially those who are financially vulnerable.
With reduced work hours, layoffs and increased need for childcare due to school closures, low and moderate-income earners are feeling the financial crisis acutely. Estimates point to the fact that approximately 24% of U.S. workers don’t have access to paid sick leave. Further, only 1/3 of workers have jobs where they can work from home, according to the Bureau of Labor Statistics, which leaves 2/3 of workers in a place of income insecurity.
It’s tempting to feel hopeless when the news sounds so dire. But there are bright spots to be found. News reports show that more employers are enhancing sick-leave policies and committing to pay their employees who can’t work because of closings. Reports of emergency relief funds to impacted workers are more common these days. To be sure, none of it is enough to fix the problem, but it’s a step in the right direction. The question that remains: What can families facing a financial crisis do to stay afloat? Managing your finances in a crisis requires a solid plan. There aren’t easy answers, but there are several time-tested action steps that can help turn a financial crisis around.
How to Navigate A Financial Crisis
Create an action plan:
You need to act quickly during a crisis. Start with an honest assessment of your financial resources and create an emergency budget that reflects these resources. While the circumstances that led to this crisis are not your fault, it remains your responsibility to take action. A “wait and see what happens” approach will not help in this situation, and may only make things worse.
Prioritize urgent expenses:
It’s important to cover your most important financial needs first. Take care of housing, utilities, food, and transportation needs before other expenses. If there aren’t enough resources to pay for some of your bills, contact your creditors to let them know your financial situation as soon as possible. Make sure to ask whether there are any temporary hardship programs you could benefit from. There are more of these programs being announced each day, so take advantage of any resources being offered.
Ask for help:
There are professionals to help you navigate the uncertainty of these times. Non-profit credit counselors are a tremendous resource to help you evaluate your financial situation and find workable solutions to address your concerns. The National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA) can help you find a credit counselor in your area.
Address immediate financial concerns:
There could be a variety of resources you aren’t aware of to help you during this time. Contact your local 211.org for a list of resources in your areas that could include everything from food assistance, medical needs, unemployment resources, utility or internet resources for those working or learning from home and free education resources for your family.
Prevent a Financial Crisis Before it Occurs
If your family is doing well financially during this time, it’s wise to do everything possible to prepare for a financial emergency, should one come in the future.
Three preventative steps to prepare for a financial crisis:
- Create a household budget: A budget is a key part of financial security and can help you optimize your spending for future success. Use your budget to assess where you are right now, and look for opportunities where you can cut back and conserve to save money for the future.
- Track spending monthly: Keep track of what you spend and modify your budget if things change. Keeping close track of your spending can help adjust quickly if you experience a financial setback.
- Create an emergency savings plan: Use your household budget to identify areas where you can make savings a priority so you can develop an emergency fund. Even as little as $500 – $1000 can go a long way toward helping you out of a tight financial spot in the future.
If you are facing a serious financial setback, it’s important to recognize that there is hope for recovery. Recovering financially is easier if you know where to look for help. With a solid plan and resolve to keep moving forward, you can regain your financial health and come back even stronger.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. CESI is here to help. Our counselors are available to assist if you are experiencing job loss, temporary loss of income or financial hardship during this time. Contact us today for a free financial assessment with one of our certified credit counselors.
About the Author
Mike Croxson is the CEO of Consumer Education Services Inc. (CESI.) With more than 30 years of experience in the financial services industry, Mike’s skills include a particular focus on adapting new technology to meet the needs of consumers struggling with their financial situation.