The Coronavirus pandemic has affected us all in ways that we didn’t anticipate at the start of the year, especially when it comes to our finances. And unfortunately, just as federal emergency benefits are starting to run out, signs of a second wave of the virus are looming—and some may even say it’s already here. 

The good news is that there are ways to protect your finances in the event of a second wave of Coronavirus. Whether you took a hit over the past few months or not, here’s some advice on what to do next to safeguard your finances moving forward. 

1. Make sure you have an emergency fund .

It’s always a good idea to have money set aside in case of an emergency, and right now it’s especially important to do so. If you didn’t suffer from a job loss or loss of income during the first wave of Coronavirus, you may already have money set aside in case of an emergency. If you suffered a financial loss and tapped into your emergency fund, now is a good time to see what you can afford to pay back into it. You should make a goal of putting away three to six months of your regular income. 

It’s also important to note that an emergency fund should be liquid and easily accessible. This means it should be kept in a savings account that you can easily withdraw from. It can take longer to withdraw invested assets like stocks and bonds. 

2. Consider securing a home equity line of credit 

If you do suffer a job or other financial loss during a second wave, it’s possible that you will need to borrow money to stay afloat. While borrowing from a 401(k) is a possibility, you’ll have to pay a steep penalty if you can’t pay the money back in time. If you secure a home equity line of credit, you only borrow money when you need to. So opening the line of credit now doesn’t mean you have to borrow anything. But, in the future, it gives you the ability to borrow as needed. 

3. Check on your retirement investments 

A second wave of COVID-19 could lead to another significant market drop, so you should make sure that your retirement funds are allocated appropriately for your age. If you’re older, you may want to check that you’re investing more conservatively—the majority of your savings shouldn’t be in stocks. And if you’re close to retirement age, you may want to make sure that you have a healthy emergency fund in case you’re forced into early retirement. 

For those who are younger, now is a good time to increase your contribution to retirement accounts, especially if you’re saving money that you would normally use for entertainment, vacations or other non-essential expenses. 

4. Communicate with lenders early 

If you're worried about paying back a loan, credit card balance or bill, it's a good idea to reach out to your lender proactively rather than wait. The Consumer Finance Protection Board (CFPB) has encouraged financial institutions to work with borrowers during this time rather than penalize them. When you contact your lender, be prepared with information like why you're unable to meet your obligations and how much you can afford to pay back during this time. Many lenders will be willing to work with you on a repayment plan, which will protect you from hefty fines and dings to your credit score.

5. Keep in touch with your financial professional 

A financial professional can help you navigate through the difficulties of a second wave of Coronavirus. They will help keep you up to date with any federal emergency resources that may arise in the future, as well as resources from the specific financial tools that you use. Everyone’s financial situation is a little bit different, but a financial professional can give advice on borrowing money to help through tough times, handling your investments during an economic downturn and protecting your retirement fund from taking a hit.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2021 Advisor Websites.