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Navigating the Financial Impacts of COVID-19

September 2020

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

Americans have now lived with the financial effects of COVID-19 for six months. Many have experienced a loss or reduction of income and related impacts such as food insecurity, depletion of savings, and outstanding payments for rent, utilities, loans, and other household expenses.

Rutgers Cooperative Extension recently sponsored a webinar called “Navigating the Two Financial Faces of COVID-19.” The webinar provided tips for those who have suffered major financial losses as well as those who have experienced little or no financial effects related to the pandemic.

Below are 12 strategies that were suggested for people experiencing financial distress. Every small step matters.

  1. Create a Budget and a Payment Plan - Use the Rutgers Cooperative Extension Spending Plan Worksheet (PDF) to project future income and expenses and the Consumer Financial Protection Bureau Bill Payment Calendar (PDF) to list all your bills and when they are due. Pay particular attention to the dates of automatic payments to make sure that there are sufficient funds available in your bank account to pay these expenses.
  2. Spend Less - Try to reduce spending by the amount of lost income, if possible. Track income and expenses and adjust as needed. Start expense cutting with variable expenses and eliminate non-essential automatic payments such as streaming services and gym memberships. Switch to cash vs. plastic (credit or debit cards) for most purchases.
  3. Prioritize Spending - Group household expenses into three categories: Needs (food, rent/mortgage, utilities, medication co-pays, phone, Internet, Health insurance), Obligations (i.e., expenses that involve laws and contracts) and Wants (i.e., things that are not needed to survive and have no obligation such as dues, gifts, donations, and savings). Pay bills in this order: needs before obligations and obligations before wants. Food is the #1 need.
  4. Adjust Voluntary Payroll Deductions - Consider temporarily suspending (or reducing) voluntarily payroll deductions, if working on a partial furlough. Examples include automatic deductions for charitable contributions, credit union deposits, retirement plan deposits, and income tax over-withholding.
  5. Seek “Side Hustle” Income, If Possible - Ramp up an existing “side hustle” or seek out new freelance opportunities. Look for growth opportunities based on customer needs in the current economic landscape and market your skill set and services using social media tools such as Twitter and LinkedIn.
  6. Stay Insured - Take advantage of employer insurance benefits for as long as they last. When employer health insurance coverage ends, explore COBRA or Affordable Care Act (ACA) coverage. An ACA plan with a subsidy (if you have a limited income) will be likely be the more affordable alternative.
  7. Adjust Your Income Taxes - Take out or set aside money for income taxes due on unemployment benefits and complete a new W-4 tax withholding form to account for a reduced income.
  8. Protect Your Credit - Call creditors and utilities to explain changes in income and to request payment flexibility. Take good notes on conversations with creditors and only agree to terms that you can afford.
  9. Build Human Capital - “Upskill” yourself to prepare for your next position through certification programs, online courses, “technology tinkering,” and other training. Make yourself as marketable to employers as possible.
  10. Reach Out for Help - Call 211 or visit for information about local human services providers. Benefits received from an agency (e.g., food pantry) can free up funds for other expenses (e.g., rent and utilities).
  11. Avoid Pandemic-Related Scams - Be wary of pitches for phony charities and questionable claims related to COVID-19 testing and treatment, government benefits, and the sale of in-demand products. Fraudsters often frame their pitches around current events and take advantage of people who are stressed out and distracted.
  12. Take Advantage of Extra Time- Enjoy walking or other physical activity and spend quality time with family and friends, in person or virtually. Other good uses of extra time are home maintenance (e.g., painting and cleaning out the garage) and financial management (e.g., calculating net worth (PDF) and checking credit report (PDF)) activities.