COVID-19 is upending American life as we know it. Weeks ago, small businesses were open and thriving and millions of workers were going about their jobs, worrying more so about deadlines than anything else. Now, countless people are out of work while small businesses struggle to keep the lights on and keep employees on their payroll. Meanwhile, the stock market has been tanking and as Americans are forced to hunker down, they're already starting to spend less across the board (other than on toilet paper, of course).
All of this, unfortunately, has the makings of a full-blown recession, and while it's too soon to predict whether we'll actually reach that point, President Trump recently acknowledged that strong possibility. That's why it's so important to build an emergency fund now. Without money in the bank, you're apt to struggle to pay your bills if you lose your job or your hours are cut if, or when, the economy gets worse.
But how are you supposed to build an emergency fund when we're already in an emergency situation? It may seem hopeless, but here are a few things you can do to eke out some money for your savings account.
1. Cancel recurring expenses that aren't essential
The gym membership you pay for monthly probably isn't doing you much good right now, what with many fitness facilities being ordered to close. And while you may enjoy the subscription box of pet toys and paraphernalia you receive every month, if you don't have a lot of money in savings, now's the time to cancel and recoup your $40. If you comb through your bank and credit card statements, you're likely to find at least one or two things you regularly spend money on that you can do without. Cutting back on those things is a good way to beef up your savings before things get worse.
2. Use social distancing to your financial advantage
Dining out at restaurants, going to movies, seeing concerts, and getting together with friends are all big budget-busters most of the time. The good news, if you want to see it that way, is that the requirement to self-isolate is taking much of that spending off the table, which means you have an opportunity to take the money you'd normally blow on entertainment and eating out and put it in the bank instead.
3. Ramp up a remote side hustle
Clearly, now's not the time to pick up extra shifts driving for a rideshare company or moonlighting as a personal trainer, because we're all supposed to be limiting our contact with other people. But if you have a side gig you're able to do from the safety of home, like web development, remote tech support, online tutoring, or content editing, you can try logging in some extra hours and using your earnings to pad your savings.
Generally speaking, it's smart to have an emergency fund with enough money to cover three to six months of essential living expenses. If you're nowhere close, make every effort you can to boost your cash reserves while you still have an income. We don't know when the current health crisis will start to blow over and whether a recession will further cripple our nation, but the more money you're able to sock away, the more protection you'll buy yourself in the face of the many unknowns we're grappling with today.