Personal Finance Advice For The Coronavirus Crisis
MICHEL MARTIN, HOST:
We're focusing this hour on answering practical questions about the coronavirus and all the changes to daily life it's brought about. In a minute, we'll hear about how to juggle dating and social distancing. But first, we're going to turn our attention to personal finances.
It's probably safe to assume that the steps being taken to control the coronavirus outbreak is affecting your finances. On the one hand, you might be saving on your commute. On the other, you might be spending more, stocking up on food and cleaning supplies or books and games and activity sets for the kids. And a lot of people are making less money or seeing income dry up completely because so many workplaces have shut down.
That got us wondering about what we should be doing with our money during this time, so we've called Kimberly Palmer. She is a writer at NerdWallet. That's a site dedicated to giving financial advice. And she's going to give us some money management tips.
Kimberly Palmer, thanks so much for joining us.
KIMBERLY PALMER: Thanks for having me.
MARTIN: Well, first of all, I think it's accurate to say that a lot of people are nervous right now, and that seems to be leading to some panic-buying at the grocery store or the drugstore. Do you have some advice on what people should try to keep in mind as they stock up for self-isolation?
PALMER: It can be a good idea to buy groceries to help you last through any time period you have to spend in your house, which for a lot of people is a week or more. So we are buying more than we're used to, and there's nothing wrong with that. But it does put a strain on a lot of people's budgets in the short term. And so this is what really underscores why it's so important to have an emergency savings funds - so we can cover situations like that when we see our expenses suddenly shoot up.
But there's no need to go to the extent that we've seen with people over-buying things like toilet paper, paper products, canned goods that could last for months. And so you definitely want to apply a sense of reason. So you really don't need all the food you could imagine for the next six months.
MARTIN: Well, you talked about the importance of an emergency fund. But the Labor Department reported a jump of 70,000 new claims for unemployment since last week. I'm just going to assume that some of these folks don't have an emergency fund. So is there something that people who find their income suddenly cut off could be doing right now?
PALMER: Yes. In a lot of cases, people have to very quickly prioritize which bills they're going to pay this month. In some cases, it's just not possible to pay all of them. And so if you can't make your credit card payment, for example, call your credit card issuer and see if they can give you more time, if they can waive interest because of the situation right now. Some companies are proactively making those kinds of offers to consumers. So you have to call and ask. So that can be a first step. It can give you a little bit more time to get you that help.
And then also, in some cases, some people, if you have good credit, you can use your credit card to make purchases. You still want to be sure to make your minimum payments every month so you can protect your credit score. But that can give you a little leeway if you have that option, if you have a credit card that you can use.
MARTIN: Kimberly, are there any specific changes you're making right now?
PALMER: Yes. We have three kids, and so we are naturally cutting back in areas like kids' activities. We usually are spending a lot right now on sports for springtime, dance classes for my daughter. So we're cutting back because we have to. Those have been canceled. So all of that spending that we used to do we are now putting into savings because it just helps give us a little bit more buffer since there's so much uncertainty right now.
MARTIN: And what I think I hear you're saying is you're being very intentional about it. Is it - so do you have a specific method for this? I mean, do you have, like, a specific budget for restaurants? Or do you say to yourself, oh, I would be ordering out, you know, Friday night takeout, but instead, I'm going to transfer this amount to my savings? Like, do you have some system for keeping track of what you're actually saving?
PALMER: We use the 50-30-20 budget. So basically, 50% we dedicate to need. So that's, like, our mortgage and groceries. Thirty percent is wants, and that's the restaurant spending or ordering takeout. And then 20% is debt payments and savings. But it's that 30% that's changing right now. And so where we used to have that restaurant spending, personal care spending, getting haircuts and activities for my kids, that's what we can now transfer into savings. Because there's so much uncertainty, we want to build up our emergency savings like so many people.
MARTIN: That was Kimberly Palmer. She is a personal finance writer at NerdWallet.
Kimberly Palmer, thank you so much for joining us. And good luck to you, too.
PALMER: Thank you.
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