Skip Navigation

COVID-19 Action Steps

December 2020

Barbara O’Neill, Ph.D., CFP®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension

COVID-19 reached American soil ten months ago and business closures and layoffs have thrown the incomes and assets of millions of U.S. households into a downward spiral. Americans can be grouped into one of three categories according to the impact of the COVID-19 pandemic on their financial lives:

  • Reduced income and struggling
  • Stable income but anxious
  • Increased income with opportunities.

Regardless of what group you fall into, there are things you can do to stabilize your finances, build resiliency, and enhance financial security. Below are ten action steps to consider during the months ahead:

  • Develop Expense Categories - Make three lists of expenses: Needs necessary for survival (e.g., rent, utilities, food, medication copays, transportation, phone/internet, and health insurance), Obligations (e.g., credit cards and student loans, child support, taxes, and dues), and Wants (expenses not required for survival or you have no obligation to pay).
  • Prioritize Expenses- Starting with needs, put expenses in priority order and pay bills until money runs out. One way to prioritize expenses is to consider the consequences of non-payment for each expense. What is the worst thing that could happen if a certain expense is not paid? With this “lens,” food is always the highest priority need. People need food to survive. However, food may be available from food pantries, which can free up cash for other basic needs.
  • Assess Household Resources - Calculate personal or household net worth (assets minus debts) to get a “snapshot” of your finances. Pay particular attention to cash on hand, emergency fund savings, and cash value life insurance and retirement savings plan assets that could be borrowed against, if necessary.
  • Maintain Health Insurance - Take advantage of employer health insurance for as long as it lasts. After that, seek new coverage. Four options for laid off workers are: a spouse’s employer plan, Medicaid (if eligible), COBRA through a previous employer (if that employer still exists), and Marketplace coverage under the Affordable Care Act. ACA options are usually cheaper, especially with subsidies on a reduced income. Visit for details.
  • Beef Up Your Emergency Fund - Save more, if possible, because economic conditions (personal, local, and global) can change. Experts are now recommending larger emergency funds equaling six to nine months expenses (or more), given the extent of COVID-19 related job losses. Save as much as you can whenever you can.
  • Consider Refinancing Your Mortgage - Consider replacing your current mortgage with a lower interest loan if the ¬†¬†math makes sense (i.e., the interest rate savings for a projected loan term exceeds the closing costs). Mortgage interest rates are at currently at historic lows, which makes homeownership attractive.
  • Make Prudent Home Improvements - Consider making home improvements that simultaneously increase the comfort of your home and provide a high return on investment (ROI) if a move becomes necessary. Examples include bathroom and kitchen remodeling, landscaping, and the addition of a deck or patio. Many people are improving their homes by reallocating funds that were previously budgeted for cancelled travel and entertainment plans.
  • Get Estate Plans in Order - Review your existing estate plans and revise them, if necessary. Witnessing over 250,000 Americans dead due to COVID-19 is a powerful reminder to have key legal documents (e.g., will, living will, and durable power of attorney) in place. Expect some delays as many attorneys are swamped.
  • Increase Retirement Savings - Consider upping retirement savings plan contributions if COVID-19 has resulted in increased income and/or reduced expenses (e.g., commuting, childcare, and/or eating out). Increasing savings by just 1% more of pay can result in tens of thousands of dollars of extra savings over several decades.
  • Be Philanthropic - Reap the financial benefits of contributions to qualified 501(c)(3) organizations that can help others who are hurting due to COVID-19. For the 2020 tax year, as a result of the CARES Act, taxpayers can take an “above the line deduction” and write off up to $300 of cash donations without having to itemize deductions.