I've lost part of my income to COVID-19, but I'm still loading up my savings account for 2 main reasons
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- In these times of uncertainty, I'm buckling down and saving as much as possible.
- Even though I haven't lost my job, I'm boosting my emergency savings fund in case I lose income in the near future. The extra padding in my savings account can also be used to support my friends, family, and community if needed.
- I'm also funneling more income into my investments while the market is down.
- Find out who has the best high-yield savings account right now »
As unemployment goes up and the market crashes, saving any money we can becomes more important than ever.
As a freelancer, my income has taken a small hit, as I've lost some assignments. Despite that hit, I'm increasing my savings rate and putting that money toward my savings account first, and my investment account second.
How I'm saving extra money during the COVID-19 pandemic
Social isolation makes it a lot easier to save money, even with the hit my income has taken. It helps that my biggest budget item before the pandemic was travel, and I can no longer spend money on that.
I'm also saving a lot of money on food, transportation, and activities by staying home and cooking all of my meals. I don't own a car, so I'm not having to make car payments or pay for car insurance for a vehicle I'm not using.
I want to beef up my emergency savings fund
I'm lucky that I already work online and have only lost a small portion of my income, and that, overall, my industry hasn't been impacted as severely as others. However, we could very well still be in the beginning stages of this pandemic, and how it affects our economy in the longer term remains to be seen.
For this reason alone, I want to save as much income as I can right now to bulk up my emergency fund even more. I'd feel more comfortable with at least a year's worth of basic living expenses in a high-yield savings account, which is a low-risk way to save money that you want to have immediate access to.
I want to be able to support others in need
Even if I don't end up losing work, having extra money in savings means I can afford to support those who are struggling financially. Part of the extra padding in my savings account can serve to help out friends and family should they lose their jobs or need a place to stay.
What's more, a lot of businesses and community organizations are struggling right now. By saving up some extra income, I can use that money to support businesses and organizations in my area in the hopes that they won't have to shut their doors.
I want to increase my investments while the market is down
Once I've padded my savings account a bit more, I plan to continue saving at a high rate and investing all of that money.
Many people are wary of investing during such uncertain times, especially because we have no idea when the market will actually hit rock bottom. However, market downturns are a great time to invest.
When stocks tank, you can look at it as getting a discount on your investment. Even though the value of your shares might continue to move downward, eventually, you should see positive returns that far outweigh whatever losses you might experience in the short run.
It helps that I have a long time horizon until retirement - at least 20 years - and I don't plan on cashing out investments any time soon. This gives my portfolio plenty of time to recover from any losses.
Boosting your savings rate might not be possible right now, especially if you're struggling to pay the bills. However, if you have the ability to save at all, even if it's only an extra $25 per month, now is the best time to do it.
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