Here's how to navigate your finances when the future is still so unclear and Congress hasn't passed more stimulus
Cases of Covid-19 are on the rise again and health officials are warning of the possibility for "exponential spread." That, paired with the upcoming presidential election and the fact that just over half of Americans report that they're still being impacted by the effects of the pandemic, can make it feel like an impossible challenge to make financial plans for the future, especially since Congress hasn't passed any additional stimulus.
"Many Americans have been hugely impacted by challenges brought on by the coronavirus," says April Schneider, head of consumer and small business products at Bank of America who's hosting a new Money Talks series. That's especially true for younger Americans, including millennials, who may not have built up emergency funds quite yet or who may be navigating their first real financial challenges.
Knowing you're not alone in these challenges can be comforting as well as encouraging, Schneider says. And millennials (ages 24 to 39) are definitely not alone. About a third of millennials say their financial situation has worsened over the past six months, according to Bank of America's recent survey of over 2,500 U.S. adults.
"There's no question the current environment has disrupted many financial plans and timelines — and the best thing we can do is to acknowledge this reality and adjust," Schneider says. In fact, Schneider says that not only is it possible to make financial plans right now, but the best strategies to move forward are all about getting the basics of financial planning right.
Here's a look at what you can do to set yourself up for success if you're facing different financial situations as a result of the pandemic.
How to navigate an income loss
Tens of millions of Americans have been laid off, furloughed or experienced cutbacks on their hours throughout the pandemic. And that's still ongoing, especially as businesses across the country continue to face slower demand for some products and services.
New filings for regular unemployment insurance benefits totaled 787,000 for the week ending Oct. 17. While that's the lowest level of regular jobless claims since the pandemic began in March, it's still more people than during the peak of the Great Recession.
If you recently suffered an employment setback, there are many time-sensitive steps in the days — and weeks — after a job loss or salary cut that can help you find your financial footing, according to Schneider. "I always encourage people to get as much information as they can as quickly as they can to reduce or alleviate stress," Schneider says.
As soon as you find out about any planned employee cuts, check your employee handbook to see if you're eligible for severance pay, Schneider says. Additionally, depending on the state where you live and work, you may be allowed to collect payment for unused accrued vacation time and sick days.
If you have been laid off, make sure to ask your employer about how you will receive your last paycheck.
If you're laid off or furloughed without pay or partial pay, you may qualify for weekly unemployment insurance benefits. That's also true if you've received a pay cut or had your hours reduced.
There's no question the current environment has disrupted many financial plans and timelines — and the best thing we can do is to acknowledge this reality and adjust.April Schneiderhead of consumer and small business products at Bank of America
If you're worried about paying the bills, part-time or gig work can help you bridge the gap by creating supplemental income. Half of millennials and about 46% of Gen Z (defined here as ages 18 to 23) currently have some type of side hustle compared to 39% of all Americans, according to a recent LendingTree survey.
To find a side gig that works for you, think about what you're good at, Schneider says. Maybe it's photography, writing, tutoring, cooking or speaking a foreign language. And ask yourself: Can you get paid for using those skills? "Today's virtual world has created even more opportunities to leverage skills you'd once consider a hobby in new, profitable ways," Schneider says.
But keep in mind that, as with any new gig, you'll need to learn how to make smart financial moves, including making sure you prepare to pay taxes and watch profits.
If you've lost your job completely, it's also important to quickly replace your health-care plan so that you're financially covered if any medical emergencies arise, Schneider says. If you're under 26, you may be able to join a parent's health insurance plan. If you're married, you can likely be added onto your spouse's plan.
Otherwise, consider shopping the federal government's health insurance marketplace, which is generally cheaper than a Consolidated Omnibus Budget Reconciliation Act (COBRA) program plan.
How to navigate financial goals
Even if you haven't suffered any direct financial fallout from the pandemic so far, you may feel unsure about how to plan for the future or what to do with any savings you do have right now.
Use this moment to take a step back and recalibrate your financial goals (both short- and long-term) and figure out any changes that need to be made, Schneider says. Does that dream vacation fund that you had set aside now need to cover the costs associated with postponing a wedding? Should you put off buying a house for now? Should you still continue to save for the down payment?
If you're not sure where to start, Schneider recommends using a "decision tree." In a "decision tree," you lay out all of your options, plus the pros, cons and costs associated with each.
"It's a great tool to help you plan out your short-term and long-term goals and identify the best combination of steps to achieve them," Schneider says. It can come in handy if you're navigating the costs of your child's remote or hybrid education, child care, your household budget and your own career all at once.
All of these things add up and can collectively have a big impact on your financial situation.April Schneiderhead of consumer and small business products at Bank of America
Remember: Your goals don't have to be set in stone, especially during times like these, Schneider says. But identifying your priorities before you start planning a budget will help. Knowing that you want to reduce your credit card debt may make it easier to cut spending, for example.
Once you've recalibrated your financial goals, set specific savings targets and adjust your expenses accordingly. You want to make sure you set aside enough each month to reach your goals.
It's also important to keep track of your progress. Build time into your daily or weekly routine to check in on your goals, Schneider says. It can also help to celebrate the small wins while keeping your eye on the big picture, she adds.
Whether you're facing a financial setback because of the pandemic or you're just unsure of how to navigate all the uncertainty, one of the biggest missteps you can make right now is to just not think about it, Schneider says.
"It's so important to lay the groundwork with actions like creating a budget, evaluating needs versus wants and assessing your debt to determine the right payment strategy," Schneider says. "All of these things add up and can collectively have a big impact on your financial situation."
Check out: A guide to resources that can help you pay bills now, from rent to health care
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