By Laura Royer
The COVID-19 pandemic has caused many military families to feel a financial crunch. As a Personal Finance Manager (PFM), the following are some things that your clients can do to navigate through the “financial storm.”
- Assess Their Net Worth. Have your client conduct a net worth assessment to see what they have to work with financially. Preparing a net worth statement will help your client get a clearer understanding of their available financial resources and it will be useful in making decisions about how to best use the funds during a crisis.
- Create a Crisis Spending Plan. A crisis spending plan is different from a normal, everyday spending plan. In a crisis spending plan, a client leaves in expenses that are absolutely necessary or that they have an obligation to pay. The idea is to cut out all unnecessary spending temporarily while the client is facing financial hardship. For example, a family may decide not to eat out or cut the cable temporarily until they get back in a financially steady situation.
- Prioritize Expenses. Part of creating a realistic crisis spending plan is for the household to prioritize all bills or expenses. Help your client determine how much money is needed to cover essential monthly living expenses and determine if enough income is coming in to cover those expenses. If not, having expenses prioritized in order of priority will help the client make difficult, yet important, decisions for which bills or expenses to cover first, second, third, and so on.
- Free Up Money from Services. After your client has prioritized expenses, have them assess all of their bills and look for ways to minimize costs by freeing up services they do not use or need. Examples include:
- Cell phone service – look at minutes or data used, extra lines that may not be needed, tablets that do not need to be on data plans, etc.
- Utilities – identify ways to save on water or electric bills.
- Insurance costs – review all insurance policies to see if any adjustments can be made to lower premium costs.
- Monthly subscriptions – cut out all unnecessary membership like gym, movie packages, mobile apps, deliveries, etc.
- Identify Ways to Generate Extra Income. When experiencing a financial setback, a military family may have other ways to generate extra income. He or she could do things like:
- Sell unwanted stuff from around the house.
- Offer freelance services such as writing blogs, photography, online or in-person tutoring, lesson plans for homeschooling, dog walking, editing documents, video or audio.
- Look for Assistance Programs that Will Help. If someone in your client’s family has lost their job, they may qualify for unemployment benefits. It may take a while for the application to be processed, but if they are approved, the money will be retroactive. Based on the situation, military families may consider applying for local assistance programs to help with utility bills or SNAP for grocery assistance. The U.S. government also has many relief programs available to families impacted by COVID-19.