In the U.S., more than 3.5 million people have been infected with the coronavirus as of July 16, 2020. Although the pandemic has been devastating, it’s also had a significant impact on the economy, with more than 30 million job losses this spring. In fact, a FinanceBuzz study found the financial effects have been so substantial that people are more worried about paying their bills than catching COVID-19.
With so much stress — worrying about money, making ends meet, and keeping your family safe — you may literally be losing sleep. That’s a big problem; when you don’t get enough sleep, you put your health and safety at risk, and you can’t perform at your best. Sleep deprivation increases your risk for anxiety, makes you more forgetful, and even suppresses your immune system, which increases your likelihood of getting sick.
If you aren’t sleeping over worries about money, here are steps you can take now to start taking control of your finances.
Assess your current spending
First, you have to know where you are financially. The point of this exercise isn’t to shame yourself for your spending habits; you simply want to get an accurate and objective measure of your situation.
Look at your bank and credit card statements and review how much you’re spending each month compared to how much income you’re earning. Ideally, you’re making more than you spend and have some breathing room. If that’s not the case, we’ll talk about fixing that in the next steps.
Track your spending moving forward
Next, commit to tracking your spending. No single method works for everyone, so think about what’s easiest for you. Some people prefer writing everything in a journal while others like using a spreadsheet. You might want to use an app like Mint, which syncs with your bank and credit card accounts and automatically tracks your spending for you. Find a convenient method for you that you’ll stick with for the long term for the best results.
Cut your expenses
After reviewing your spending habits, look for areas where you can cut corners. With so many people growing bored of sheltering-in-place, you may not realize you’re ordering things online you don’t really need. You can use that extra time to work on easy ways to lower your bills.
If you’re looking for some ideas on where to cut back, here are a few common areas:
- Restaurant food: Many people are relying on takeout and delivery right now. Although it’s convenient, delivery fees and tips can be costly. Instead, save those services for special treats, and take a little extra time preparing your own meals and spending less on groceries.
- Streaming services: Because you’re spending more time at home, you may have signed up for multiple streaming services, such as Netflix, Hulu, Disney+, and HBOMax. Having numerous services can add up. Try to pick one or two favorites, and cancel the other ones to save some money. You can also use one of the best credit cards for streaming services and earn cash back or travel rewards for money you’re spending anyway.
- Pause impulse buys: If you are tempted by impulse purchases, use Unroll.me to stop getting marketing emails from your favorite stores.
- Negotiate bills: Use TrueBill or Trim to automatically scan your credit card statements and cancel unused services. They’ll also negotiate your bills for you, such as your cell phone and cable bills.
Call your creditors
If you lost your job and can’t pay your bills or your employer cut your hours at work, financial stress can cause you to lose sleep. If that’s the case, reach out to your creditors right away. Student loan lenders, credit card companies, and auto lenders may have financial hardship programs that could reduce your payments. Or they may allow you to postpone your payments for a few months, which gives you time to get back on your feet. By reaching out, you may even avoid costly late fees.
Reducing your monthly payments, even temporarily, can give you some extra breathing room so you can afford the essentials — and get some much-needed rest at night.
Take a hard look at your debt
Having debt hanging over you can be a major stressor. Coming up with a repayment plan and putting it into action can help you feel more in control again.
Sit down and organize all your billing statements, including your credit card statements, student loan statements, car loan statements, and medical bills. List all of your loan amounts, their interest rates, and your monthly payments. Think about what repayment strategy would make the most sense for you.
Two popular approaches to debt reduction are the debt snowball and debt avalanche strategies:
- Debt snowball: With the debt snowball method, you focus on paying off the loan with the lowest balance first.
- Debt avalanche: If you use the debt avalanche method, you focus on paying off the loan with the highest interest rate first.
Whichever method you choose, stick with it and stay focused. Over time, you’ll see results.
Start saving in an emergency fund
If you don’t have an emergency fund, every little hiccup or unexpected expense can be a big problem. You can help give yourself some relief by building an emergency fund. Although saving three to six months’ worth of living expenses is ideal, don’t let yourself get overwhelmed by big numbers. Start small. Aim to set aside just $100 to $500 at first, and build from there.
A simple way to save it to put aside a portion of every paycheck. If you get any unexpected windfalls, such as a birthday gift or tax refund, deposit that directly into your savings account to bulk up your emergency fund. Consider opening a separate high-yield savings account for your emergency fund. This will help you resist raiding your savings and also earn you more interest.
Automate your bill payments
Late fees are a costly fee you should never have to pay. Whenever possible, automate your bills. See whether your bank offers automatic bill pay. If not, many companies, including utility companies, allow you to use your credit card for recurring payments. However, only sync your credit card if you know you can pay off your balance in full each month to avoid costly credit card interest charges.
Sell your old electronics, books, and clothes
You likely have hundreds of dollars worth of unused electronics, books, and clothes in your home. If you sell those items, you can turn your old stuff into cash — then use that money to pay down debt or bolster your emergency fund.
- Electronics: You can sell used electronics on Decluttr, Gazelle, or at Best Buy.
- Books: Sell your old textbooks on BookScouter or Chegg.
- Clothes: You can sell individual items directly to consumers with Poshmark, or send bundles of items to ThredUp.
Earn extra money
If you’re barely making ends meet, bringing in additional income can make you feel more comfortable and build up your emergency savings faster. From delivering groceries to tutoring online, there are lots of different ways to earn extra money in your spare time.
Automate your savings
Don’t leave your emergency fund or other savings accounts to chance; it’s too easy to spend what’s in your checking account. Take advantage of automation to move your money into designated savings accounts so it’s harder to access that money. Set up recurring deposits so that money is automatically deposited regularly.
Consider opening more than one savings account for your various goals, such as three different accounts: one for your emergency fund, your dream vacation, and your house fund. By having designated savings accounts, you can stay focused on your goals.
If uncertainty about the future causes you anxiety, planning and investing for the long-term can help you rest more peacefully. You don’t need to have thousands of dollars to start investing. With apps like Acorns and Stash, you can invest in fractional shares and start investing with as little as $1.
Don’t read too much news
Although keeping up with the news can help you be well-informed, it can also be overwhelming and stressful. If you find yourself experiencing feelings of depression or anxiety because of the latest updates on the stock market or coronavirus, take a break from the news and focus on a long-term mindset.
We have survived pandemics before. And historically, the market has delivered positive returns. By staying consistent and riding out the ebbs and flows, you can continue to see growth with your investments, so turn off the TV and your sleep will probably improve.
Talk to a financial advisor
Many people worry about money simply because they don’t have a plan in place and don’t know where to start. If that’s the case for you, consider setting up a session with an accredited financial advisor. A financial advisor can help you manage your investment portfolio and develop a plan to achieve your financial goals, such as retiring at a specific age.
Talk with a therapist or doctor
If you’re continually struggling with insomnia because of money issues and stress, it’s important to talk to a therapist or healthcare professional. Losing sleep can cause significant health issues and affect your mental health over the long term. If you’re not sure where to start or need a referral, talk to your general physician about your sleep issues.
If you don’t have insurance or otherwise are worried about the cost of therapy, there are affordable options available:
- Federally-funded health centers: At these centers, you pay only what you can afford and fees are based on your income. Use the Health Resources and Services Administration website to find a health center near you.
- Open Path Psychotherapy Collective: Open Path is a nationwide network of mental health professionals who provide care to low- and middle-income families at reduced rates.
- Sliding scale therapists: Some private therapists charge fees on a sliding scale, which means they charge different fees based on patients’ income. The less you make, the less you’ll pay. You can use sites like Good Therapy to search for local therapists accepting sliding-scale clients.
- Online therapy: Online or virtual therapy through apps like TalkSpace or BetterHelp are up to 80% cheaper than traditional therapy. And you can talk with licensed therapists on your own schedule.
If you’re dealing with a substantial amount of stress around money because of the coronavirus pandemic, you’re not alone. But all that anxiety and worry can affect your ability to get a good night’s sleep, which can impact multiple aspects of your life, including your overall health.
By coming up with a plan to pay down your debt, boost your savings, and increase your income, you can get a handle on your finances and relieve some of that stress so you can get the rest you need.