Here are 4 ways to stretch your emergency fund during the coronavirus crisis:
, don’t just spend it blindly. Make a plan for how you’ll spend the cash before it arrives. Whether you use the funds on basic essentials, pad your emergency savings or stay current on your debt payments, the money will stretch further if you take the time to figure out your immediate financial priorities. Perhaps you’re working to pay off your high-interest credit card debt this year. Maybe your goal at the start of 2020 was to eliminate your student loan balances.
Unless you’re still earning your regular income and you have a healthy emergency fund that covers at least three to six months’ worth of your living expenses, it’s probably best to reassess your financial strategy—at least in the short term. If you don’t want to lose traction, one option to consider is to continue to make those extra debt payments to yourself instead.
If you’ve been paying an extra $500 per month toward your ongoing credit card debt, consider putting those funds into your savings account instead. Yes, your credit card debt will continue to accrue interest, but you’ll have the option to access the funds for essential emergencies if you should need the money.
Hopefully, you won’t have to touch this debt fund and you can go back to making the larger payments to your creditors at the end of the current crisis. The extra interest costs, if you can’t avoid them, are well worth the added peace of mind and security that having the additional cash on hand will give you in the meantime. And, if you do need to access the money to cover necessities, you’ll be grateful for the decision you made.
Nearly all would agree that much remains unknown. Only time will tell just how dire the health and economic fallout from the coronavirus will be. Whether life returns to normal sooner than expected or the crisis grows more serious, one fact is certain. When you have extra cash in savings—even a small amount—you’re in a better position to weather whatever situation comes your way.
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