How to Use Quarantine to Your Financial Advantage
If someone had told me a year ago that I would spend several months of 2020 stuck at home and that schools, businesses, and travel would be shuttered worldwide, I probably wouldn’t have believed it. Yet, here we are enduring months of lockdowns that never seem to end.
Some states are opening businesses and restaurants slowly and at partial capacity, but schools are largely closed down and many people will continue working at home for the foreseeable future.
It’s strange for sure and we all know that, for many, the economic consequences have been devastating. However, it’s possible that some of us could find a much better, new “normal” in the end.
9 Ways to Get Ahead During Quarantine
Maybe you’ll find a way to get rid of the stuff you didn’t like about your life before, or a way to use the savings accrued from quarantine to your advantage.
If you’re looking for a silver lining in all this mess, perhaps you need to look within to find things you have the power to change about your life now — while you have some time.
1. Streamline Your Finances
In addition to using a budget, there are plenty of other ways to streamline your finances. Some of these steps can help you save money, while others can simply help you simplify your life. If you want to streamline and make your finances easier to manage, consider these tips:
- Get rid of subscriptions. If you have a ton of subscriptions you no longer use or care about, quarantine is the perfect time to cut them out of your life. You can do this manually by checking your credit card bills for subscriptions you forgot about then calling into cancel. However, you can also use an app like TrueBill or Trim to take care of it for you.
- Start a new targeted savings account. Are you tired of your bank? Take this time to open a new checking or savings account, many of which offer cash bonuses just for signing up and meeting minimum balance requirements. You could even open a targeted savings account for future travel, college tuition, or some other goal.
- Bundle insurance policies. If you have homeowners insurance, renters insurance, or auto insurance with different companies, you can usually save money by bundling your policies with a single provider. Take the time to shop around for auto insurance and other policies you have, then consolidate with the provider that offers the best deal.
2. Get Organized Financially
It can be easy to get a bit overwhelmed by all the different bills, subscriptions, loans, etc., especially as your financial portfolio gets more developed.
Take this time to really get organized and take stock of your personal finances — all your assets, investments, retirement accounts, etc. — which will allow you to start to understand and track your net worth. This organization and understanding helps inform key financial decisions, because you can see your full financial future and how it may be impacted by the moves you make.
Consider using a wealth management software like Personal Capital, which offers everything from specialized support to socially responsible investing opportunities.
3. Refinance Your Debts
If you have debt, today’s low interest rates have created the perfect opportunity to refinance and save thousands of dollars. This is true whether we’re talking about getting a better mortgage rate, refinancing student loans with a private lender, or consolidating credit card debt with a personal loan.
How much can you save? You could easily wind up ahead by thousands of dollars depending on how much you owe and your repayment timeline.
If you have student debt, however, consider this example:
Imagine you have $40,000 in student loans at 7% APR with a ten-year repayment horizon. In that case, you would pay $464.43 per month for a total cost of $55,732.07.
If you refinanced into a new loan at 4% APR, however, you would pay a monthly payment of just $404.98 and your total loan cost would be $48,597.67.
4. Protect Your Identity and Finances
Most of us know we should take steps to protect our identity, but it’s way too easy to put it off. Unfortunately, waiting to protect your identity can lead to catastrophic consequences for your credit and your finances. If someone manages to steal your identity, you could even spend years and thousands of dollars fixing the mess.
Fortunately, there are plenty of ways you can set yourself up to protect your identity without ever leaving your home. For example, you can:
- Freeze your credit reports. According to the Federal Trade Commission (FTC), all three credit bureaus are required to let you freeze your credit reports for free. This action will prevent anyone from opening new accounts in your name, including you. If you do decide to get a loan or open a new credit card account, you will have to unfreeze your credit first.
- Sign up for identity theft protection. Identity theft protection companies will actively monitor your credit to watch out for fraud. Their services are way more affordable than you think, and they take care of the grunt work for you.
- Sign up for password protection services. Password managers like 1Password and Dashlane can protect your passwords and make it impossible for thieves to steal your information or hack into your accounts. These services are also incredibly affordable and easy to set up.
5. Set Up a Will
If you don’t have a will yet, quarantine is the perfect time to set one up. Doing so can ensure your assets go where you want them to go if you suddenly pass away. Not only that, but many online services that let you set up a will also let you set up a legal guardian that would take care of your children if you were gone. This is not something you want someone else to decide, so it’s smart to iron out these details and get them in writing ahead of time.
You don’t have to visit a lawyer’s office to set up this important information, either. Provided your estate and wishes are fairly simple, you can take care of the entire process on Trust & Will from the comfort of your home.
6. Sell Your “Stuff”
If you take our suggestion above to get organized, then you will probably have a pile of stuff — or even boxes of stuff — you don’t want or need. But you don’t have to let your unused items go to waste. To get ahead during quarantine, you can always take steps to sell items that are worth some value.
Consider selling some items on your local Facebook Marketplace or a community Facebook page. This would allow you to unload items to someone local and potentially avoid the cost of shipping.
You can always sell stuff on eBay.com too, or even craigslist.org. If you have electronics that are recent and in good shape, also check out Gazelle.com.
7. Track Your Spending
Now is also an excellent time to sit down and face the reality of your financial situation. I’m talking about tracking your spending — a useful task that pretty much everyone hates.
I would start by sitting down with your bank statements and credit card bills from the last 3-4 months. For each month of income and spending, tally up each of your purchases in categories that make sense for how you spend such as groceries, dining out, entertainment, transportation, and subscriptions.
The act of figuring out how much you spent in each of these categories can be a very eye-opening experience. It’s very common to think your food spending is a lot lower than it is, for example, and this is especially true when it comes to dining out.
If you never track your spending, you’ll never know where your money is going. Use the time you have to confront your real-life spending in black and white, and you won’t regret it.
8. Start Using a Budget
Once you have tracked your spending and have an idea of where you may be spending too much, you’ve created the perfect scenario to start using a budget. Your new budget can be nothing more than a written spending plan you create using pen and paper, but there are also a ton of budgeting apps and spreadsheets you could try if you want some outside help.
Budgeting software options you should check out include:
- Tiller, which lets you create a spreadsheet budget
- You Need a Budget (YNAB), which helps you create a zero-sum budget
- Qube Money, which lets you use the envelope budgeting method with the help of an app
Either way, the goal of a budget is helping you spend less on things you don’t care about so you can save more for other aspects of your life. Budgeting doesn’t have to be painful or restrictive, either. Budgeting may have gotten a bad rap over the years, but it’s really nothing more than a plan for the money you work so hard to earn.
9. Start a Side Hustle
Finally, don’t forget all the different ways you could be earning more money right now. There are so many ways to make money, and many of the best strategies are ones hardly anyone knows about.
Ways to make money can include:
- Driving for Uber or Lyft
- Taking online surveys
- Working as an online tutor
- Working as a freelance writer or virtual assistant
- Starting a blog
The Bottom Line
While quarantine brings many challenges to many of our lives, it can be seen as an opportunity to reevaluate and make lifestyle shifts for the better. Whether you take on a massive spring cleaning or save a surprising amount of money from not dining out, use this time to consider your financial goals and create a plan to achieve them.