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KXAN's Studio 512 welcomed UFCU Financial Health Program Manager Monica Muñoz Andry to discuss financial tips to help you plan for the unexpected.
It’s always a good idea, especially in times like these, to plan ahead. COVID-19 has many Americans dealing with a loss of income, homeschooling their kids, or bracing themselves for what’s yet to come.
Let’s get started with Tip 1—Establishing an emergency fund.
When planning for the unexpected, a good practice is to start by establishing an emergency fund for yourself and your family. Even if you don’t have an emergency fund set up, every day is a good day to start one. You never know how long you might need to cover expenses in the event of a loss of income, or you may even have a one-time unexpected expense that can’t wait. The rule of thumb is to save enough to cover three to six months of your regular expenses.
A strategy for success is to open a separate emergency savings account, one that is not attached to your checking. Set up automatic deposits into that account. The “set it and forget it” approach works best to help you be consistent and meet your savings goal.
Tip 2—Dealing with creditors. Another thing people deal with is that bills can really start piling up, whether it’s credit card bills, car payments or mortgages. What advice do you have for dealing with creditors?
Start by visiting your creditor’s website for the latest news and programs. Most creditors are well aware of the impact of the virus on their clients, and have timely, relevant information about their latest programs on their website.
Also, I have to stress that communication is key. Always communicate with creditors before a payment is due and inform them of your status. You might realize that the more you communicate with your creditors, the more willing they will be to work with you.
Tip 3—Create an emergency budget. In order to keep those bills from piling up, what should we be thinking about to lower our monthly expenses?
Create an emergency budget. This is a budget that eliminates any non-essential spending and drills down to exactly how much you would need for the essentials like food, shelter and transportation. Knowing how much you need for actual necessities will help prevent you from panicking because you know exactly what to cut back on and how long your savings will last.
Consider using budgeting software through your credit union or bank or research other budgeting software. Finding the right tool for you is critical in helping you develop your budget and most importantly, sticking with it!
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