With the market in flux, businesses closing left and right, and layoffs happening right before our eyes due to the coronavirus pandemic, the entire world is going through a financial crisis.
Given the circumstances, people are rightfully scared. Survival mode has kicked in in all of us. And when it comes to our finances, the questions come pouring in: should you take all of your money out of the bank? Sell your stocks? Keep your money in your 401k? Buy gold?
We brought Errol Gerson—ArtCenter professor, financial consultant, former CPA, and author of our Managing Money course—on our livestream to lend his expertise on the 8 things you can do to lower your expenses to survive the financial crisis. In the video above, he addresses what you can do to increase your income, monitor your business expenses, and how you can lessen your personal expenses.
The average person’s budget consists of these top 8 expenses:
These necessities typically come at a fixed price every year or every month, so looking at this list, you’re probably thinking, “there’s no way I can cut costs there.” You could cut one of these things off entirely, but that seems a bit crazy, especially in today’s climate.
As Errol points out in the video, “what is measured improves.” Just from paying extra close attention to these top 8 expenses, you’d be surprised how much more money you can save monthly.
For starters, with housing, Errol advises that you make direct contact with your landlord or owner of the home. If you’ve been severely impacted by the crisis caused by COVID-19, explain your situation. Depending on your housing situation and what state you live in, you may be able to ask for an extension on your next payment.
With regular recurring expenses, like utilities, maintenance, and transportation, Errol advises you also contact these businesses and, if you can, negotiate a rate or some sort of plan for the next few months. For example, you can call your cell phone provider and negotiate either a lower payment, an extension on your payment, or a new plan with reduced utilities.
Above all, Errol advises us to be proactive. If we want to lower our major expenses, we have to be proactive in calling these companies to make it happen. We have to be proactive in finding work, monitoring our regular expenses, and creating a runway to prepare for the worst.
We highly advise you to download Errol’s financial document here. In it, he lays out tactical ways to increase your income, lower those top expenses we mentioned, and even determine your business’s break-even to figure out what you can do to increase revenue.
If you're in need of financial assistance, applications for the Paycheck Protection Program (PPP) are open. You can download the full fact sheet here to find out how you can apply. This application must go through an approved SBA lender for you to qualify. If you want to determine your loan amount prior to applying, Errol provides a great example worksheet of how you can estimate your loan availability. Just click here to download the worksheet.
You can also apply for a Disaster Home/Sole Proprietor loan from the US Small Business Administration. Download the file here and be sure to read through the filing requirements so your loan is processed correctly!
We hope you’ll be proactive in securing your financial future during this crisis.