It’s probably no surprise that Americans have become increasingly stressed about their finances. A survey by financial services company John Hancock found that less than 40% of respondents were feeling moderate or extreme financial stress before the pandemic. Now, more than 60% have a major level of financial stress. And the majority don’t think things will get better in 2021.
Read More: How To Start Budgeting Now for 2021
Keep in mind, though, that there still is time to improve your financial situation this year. That might seem easier said than done. But if you take these steps now, you’ll be on more solid financial footing when the new year begins.
Be More Prepared for Emergencies
Get financial and personal documents in order. “We have learned many things during the pandemic, and one of them is the importance of getting organized,” said Marsha Barnes, founder of The Finance Bar. Create an in-case-of-emergency file with a copy of your health insurance card, insurance policies, estate planning documents (will, power of attorney and living will), a list of financial accounts with usernames and passwords, and a list of your prescription drugs, health conditions and medical history. Store it someplace safe and let loved ones know how to access it if there is an emergency.
Create an emergency fund. The pandemic is a reminder to build emergency savings to protect yourself from financial shocks that you can’t control, said Amy Shepard, a certified financial planner® professional with Sensible Money. If you’ve been spending less on shopping, commuting and dining out by staying home during the pandemic, put those savings into a high-yield savings account, she said. The goal is to save enough to cover three to six months’ worth of expenses.
Buy life insurance. If you have loved ones who count on you for financial support, you need life insurance to protect them if something happens to you. You can apply for a term life insurance policy online and possibly be approved for coverage in a matter of minutes from companies such as Bestow, Fabric, Haven Life and Ladder if you’re young and in good health.
Manage Credit and Debt
Check your credit report. You can check your credit report for free every week (through April 2021) at AnnualCreditReport.com. If you see any errors on your report, act quickly to fix them because they could be hurting your credit score — which, in turn, can hurt your ability to get loans or lines of credit, said Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling.
Evaluate subscription services on autopay. Review your bank and credit card statements for subscription services that are being paid automatically to see which you should keep and which you should cancel. “You could potentially save hundreds or thousands of dollars by kicking some services to the curb,” McClary said.
Don’t let credit card rewards expire. If you’ve accumulated a lot of credit card rewards points, check when those rewards points expire — in particular, travel rewards points. If you can’t take advantage of travel rewards, see if you can cash them in on goods or services.
Make a debt payoff plan. To pay off what you owe, make a list of your debts and the interest rates on those debts. Focus on paying off debts with the highest rates first, said Larry Sprung, founder and wealth advisor for Mitlin Financial. Review how much money you have coming in versus how much is going out to see how much more you can put toward your debt each month.
Keep Reading: 30 Ways To Dig Yourself Out of Debt
