In the midst of the coronavirus pandemic, these are uncertain times for everyone. Nearly 17 million Americans have filed for unemployment benefits in the span of just three weeks, which is one of the biggest unemployment surges in U.S. history.
With jobs scarce right now, more unemployed people are being forced to turn to their emergency funds to make ends meet. However, around 27% of Americans say they never had any emergency savings to begin with, and an additional 11% have already spent all their savings, according to a recent survey from real estate company Clever. In other words, close to 40% of people don't have a penny saved.
If money is tight, it can seem impossible to save more. However, there are a few things you can do to stretch every dollar.
1. Build a budget and cut all non-essential costs
If you don't already track your expenses and maintain a budget, now is the time to start. Fortunately, budgeting is easier than ever with the help of technology, and there are several apps that can track your spending and even categorize your various expenses.
Once you know exactly where every dollar is going, start slashing your expenses. Begin by cutting every cost that isn't truly essential. If you're still paying for a gym membership, for example, or if you find you're spending money on subscription services you don't use, cut them. You might find you're already saving money by not going out to dinner or commuting to work every day, but see if there are any other areas where you can cut back. After all, every dollar counts.
2. Look for ways to save money on essentials
After you've cut out all your non-essential costs, it's time to see if you can reduce your spending on your necessary expenses.
Comb through your budget to determine the categories where you're spending the most, and start there. If most of your money is going toward rent or your mortgage, contact your landlord or lender to see if they are offering any assistance programs. You may be able to defer payments temporarily if you're experiencing financial hardship due to COVID-19, and it never hurts to ask. Reach out to your other creditors too to see if you may be able to reduce or temporarily suspend your credit card or loan payments. Many institutions are offering help on a case-by-case basis, so how much assistance you can receive will depend on your situation.
Next, see if you can cut back in other areas of your budget, like groceries, cable, or your cellphone bill. If you've got a lot of free time on your hands, now is a great opportunity to compare cellphone plans, browse for better deals on cable or internet, or search for supermarket coupons online.
3. Put your money in a high-yield savings account
Once you've trimmed the fat from your budget and found some extra cash to set aside, it's important to make sure you're putting that money in the right place.
A high-yield savings account is a great option because you can earn a relatively high interest rate (usually between 1% to 2% per year), but you also have access to your money whenever you need it. Some types of accounts, like money market accounts or CDs, charge you a fee or penalty for withdrawing your money before a set date or for making too many withdrawals in a certain period of time. But with a high-yield savings account, you can withdraw your cash at a moment's notice without facing a penalty, which makes it a perfect place to build your emergency fund.
These are difficult times for many Americans, and with the country likely headed into a recession, it can feel like there's no end in sight. But even if you're struggling financially right now, this too will pass. By being strategic with your spending and saving every dollar you can, it will be a little easier to make ends meet.