With businesses across the country forced to close their doors to mitigate the spread of COVID-19, millions of workers have been laid off, furloughed, or had their hours reduced.
In fact, approximately one in four Americans has lost income due to the coronavirus pandemic, according to CNBC's All-America Economic Survey. And because the country may be headed toward a recession, this can be a stressful period for those who are currently out of work.
While it may be tough to find a new job right now if you've lost your source of income, there are a few things you can do to make these uncertain times a little easier.
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1. Start slashing expenses
If you've lost your job or had your hours reduced, you may need to make ends meet using your emergency savings. If you don't have any emergency savings, it's time to find some extra cash in your budget.
Comb through your bank and credit card statements to figure out just how much you're spending each month, or start using an app that tracks your expenses automatically. From there, cut everything that isn't essential. What exactly is "essential" will depend on your situation. If you're just looking to save a little bit more each month to cushion your savings, you may be able to get away with minor budget cuts. But if you're struggling just to pay for groceries, you'll need to make more drastic changes.
2. Park your cash in a high-yield savings account
Once you've freed up some extra cash in your budget, the next step is figuring out where to put it. You'll want to store your savings someplace where you're earning a relatively high rate of return, but where you can also withdraw your cash at a moment's notice without paying penalties or fees.
For these reasons, a high-yield savings account is a smart option. These accounts typically earn interest rates of 1% to 2% per year, which is much higher than the fraction of a percent you'd earn with a standard bank savings account. You can also withdraw your cash whenever you like without facing penalties, which makes these accounts ideal for establishing an emergency fund.
3. Make sure you've filed your taxes
Approximately 90% of Americans will be receiving coronavirus relief stimulus checks in the coming weeks, according to the Tax Policy Center. The IRS is using information on file from your 2019 tax return (or 2018 tax return if you haven't filed your taxes yet this year) to determine who is eligible. That means if you haven't filed your 2019 or 2018 tax return yet, get that done ASAP to ensure you get your check.
Even if you have already filed your taxes, that doesn't necessarily mean you're guaranteed to receive a check. One other factor that determines whether you get a check (and how much you'll receive) is your income. If you're earning less than $75,000 per year (or $112,500 per year for heads of household or $150,000 per year for married couples filing jointly), you'll receive the full $1,200 amount. If you're earning more than that, you'll either receive a smaller check or you won't get a check at all. But even if you fall within the income limits, you won't get your check if you don't file your taxes.
4. Take advantage of all your resources
The coronavirus pandemic has affected millions of households financially, and many businesses and other institutions are taking steps to help those who are experiencing economic hardship.
For example, many credit card issuers are offering assistance by waiving late fees or temporarily deferring payments for those who can't afford to pay their bills right now. In addition, those with federal student loans don't have to make any payments until Sept. 30, 2020 thanks to the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act.
If you've lost your income and are struggling to pay the bills, reach out to your creditors to see if they can help. Many organizations are providing assistance on a case-by-case basis, so you won't know what's available until you ask.
COVID-19 has cost millions of Americans their income, and nobody knows exactly how long this pandemic will last. The good news, though, is that there are a few things you can do to improve your financial situation -- and by taking these four steps, you can stretch every dollar.
