We may not be in a recession yet, but it's almost certain that it will happen soon. With unemployment rising and many businesses closing, you need to be prepared to weather the storm. Even with a government stimulus check, many people will still continue to struggle through a financial crisis. We want to make sure that you're as prepared as possible to handle what might be ahead and use your stimulus money wisely.
Save money where you can
The stimulus check was given out to help stimulate the economy and the point is to spend it. However, nobody knows how long this will last and you may need to stretch out any money you earn, especially if you don't have an emergency fund.
Hopefully you have an emergency fund to help you out, but if not, don't stress yet. The economy will recover and it's not a question of if, but when. If you don't have an emergency fund, and are able to save money, you should use your stimulus check to start building that emergency fund.
Now would also be a great time to create a budget. This will help you limit the amount of money you spend in certain areas and prevent overspending. During this time, it's important to save money where you can.
Find out what help is available during a financial crisis
You're not the only one who may be going through a difficult time and many companies are offering help. If you have payment protection or life insurance, you should call your provider to see if you are insured against unemployment. Sometimes, they can help you make payments when you can't.
If you're struggling to make payments, you may also just be able to talk to your creditor. They understand that it's a tough time for many people and may offer some kind of relief if you're struggling.
Also look out for scams as some people will be less willing to help. Among all the panic, some people will be looking to make a quick buck off of others. Always remember to be vigilant and fact check others. Remember, if something is too good to be true, it usually is (but not always, *cough* Defynance *cough*).
Don't take money out of investments during a financial crisis
The above obviously does not apply in some situations, but in general you should keep money invested. While the stock market has fallen recently, the losses you see aren't a loss until you sell. Throughout history, stocks have generally recovered from downturns like these. Just like after the 2008 financial crisis, the market should recover and be stronger than ever. You just need to keep your faith and stay on course.
If you're in a dire situation and need the money, sell the investments that aren't taxed advantage first before dipping into an IRA or 401K. There could be extra penalties for withdrawing money from tax-advantaged vehicles too early. There are exceptions to these penalties, so you could see if your situation qualifies.
Invest if you have an emergency fund and extra cash
If you find yourself in a situation where you have some extra money, it's best not to sit on it. If you have an emergency fund and aren't sure what to do with your stimulus check, you could invest. While the market may or may not have hit it's low, it could still be a good time to invest.
All investments are risky and returns aren't guaranteed. However, if you're investing for the long-term, the market generally goes up. It can be easy to put your money in a long-term fund and let it grow.
This article wasn't made to scare you or be pessimistic, but to make you aware that this may last a while and you should manage your money well. I also realize that everything listed in this article may not be attainable for everyone. Some people will struggle more than others and need to dip into emergency funds, and that's fine. Right now, it's important to keep you and your family safe.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
