As the economic fallout from the coronavirus pandemic drags on, millions of Americans are facing tough financial decisions.
Just this month alone, nearly one-third of households (32%) had outstanding housing payments at the beginning of August, according to a survey by Apartment List, an online rental platform. And an estimated 5.4 million additional people will be unable to pay all of their bills by the end of August without a new job or the extra $600 in weekly unemployment insurance that expired July 31, according to Morning Consult.
Although many feel financially strained now, Dan Ariely, a behavioral economist and author of the books "Dollars and Sense" and "Payoff," tells CNBC Select that things will likely get worse before they get better.
"Covid-19 is going to be with us for a while," Ariely says. "We should start saying Covid-19 to 21 like we did with the financial crisis 2007-2008."
But establishing good personal finance habits can help and that includes making plans for worst-case scenarios. Ariely suggests writing out two lists to help you plan for the near-term and long-term future:
List #1: A list of things you can cut now
This is a list that of things to cut to immediately helps decrease your cash outflow. Take a look at your monthly spending habits and figure out what you can lose. Consider what you are paying for that you don't really need to have, such as cable or automatic subscriptions. Ariely says to think of the things that no longer bring you happiness and what you can survive without. By thinking like this, you're prioritizing your spending needs over your spending wants.
List #2: A list in case things get worse
This is a list of things you could cut further if things get worse. For some, worse might mean having your salary or hours reduced, for others, it's losing your job. By developing a plan before things get really bad, you'll feel more secure if the worst-case does happen.
"If you're fired, it's harder to make a plan because you're under a lot of stress," Ariely says. "It's better to make a plan now and be ready if things get worse."
If you're already jobless and relying on unemployment benefits, it's still important to create this list since the $600 UI boost expired last month. If your finances are tight, look into any financial assistance programs you might qualify for, whether it's through your credit card issuer or mortgage provider.
The best first step you can take right now is to prepare yourself, even if that simply means writing lists. The next step is to consider what you have saved and if you need to spend it.
Why it's OK to adjust your savings goals
Though the objective of a savings account is to let it grow over time so you can tap into it later when you most need it, that may change given people's dire circumstances, and that's OK.
"It's OK to adjust your saving goals," Ariely says. "And if you need extra cash, it's OK to draw some from your savings. It's part of the economic cycle of life. Of course, you should do it carefully, but nevertheless, you should if needed."
If you have already tapped into your emergency fund, consider depositing a portion of any stimulus check you receive back into it so you have more of a cushion for future use. Even though interest rates are lower right now, swap your traditional savings account into a high-yield savings to earn a greater return on your money.
For example, both the Varo Savings Account and the Vio Bank High Yield Online Savings Account offer an APY over 16X more money than the national average.
Bottom line
If you find yourself cash-strapped during these times, know that you certainly are not alone. Try making the short- and long-term lists that Ariely suggests so that you feel a bit more in control control over your future.
And if you are putting any money into a savings account, make sure you are earning the highest return you can through a high-yield savings account and not leaving any money on the table.
Information about the Varo Savings Account and Vio Bank High Yield Online Savings Account has been collected independently by CNBC and has not been reviewed or provided by the issuer prior to publication.
