A health crisis can have both immediate and long-term impacts on our personal financial management. Many things are out of our control, such has how long the crisis will last and how the situation will affect our families. Consumers may be experiencing either a reduction or an interruption in income. On the other hand, maybe your income is currently stable and your situation may change the longer the crisis continues. Following are steps you can take to get control of your finances during a health crisis.
Review Spending

Studies have shown that it takes individuals up to six months to adjust to a reduction in income. The effect of one less or a smaller paycheck may not occur for a few weeks.
If you are not in the habit of tracking spending, review your statements for the past month, both bank and credit card. Identify which expenses are a priority; bills that meet your basic needs (food, shelter, transportation, insurance, etc.) to pay regularly. Next, identify expenses or spending to reduce or eliminate for now. Some examples are expenses related to entertainment, dining out, clothing (unless essential), home décor. Also, make a note of expenses that can be reduce or eliminated in the future, beyond three to six months, in case the situation does not improve.
Once you have identified priority and non-priority expenses. Compare expenses to income. Is there an income deficit or surplus? If there is a deficit, what resources can you access to close the gap? Consider applying for unemployment benefits if you qualify based on your situation. Seek out federal and local assistance to stretch your income (SNAP, housing, childcare, medical). If you have emergency savings, access those funds. Because of the uncertainty of the length of the crisis, using credit to fill the gap is discouraged. If you have a surplus, put the funds in savings.
- Use the Spending Tracker to assist in reviewing your spending.
- Complete the Prioritizing Bills to help determine which bills to pay first.
Save Cash
What does your emergency fund look like? Financial planners recommend having 3-6 months of non-discretionary (bills that have to be paid) expenses in an accessible account. If you have a surplus in income after assessing your prioritized expenses, contribute the surplus to an emergency fund. If you don’t’ have an emergency fund, start one now.
Continue Paying Loans and Saving for Long-term Goals
If you have installment loan debt (mortgage, auto, etc.), continue paying the loans, do not make extra payments in order to reserve your cash. If you have credit card debt, look for a low interest or zero balance offer. This will help to reduce the monthly payment, consolidate the debt, reduce interest rates and possibly free up cash for emergency savings. Contact creditors if you think you may not be able to continue with regular payments.
Also, continue automatic savings for long-term goals (i.e. retirement). This is a good buying opportunity for investors because prices are lower. Current contributions are buying more now than when prices are higher.
- Determine the amount of your current debt by completing the Debt Log.
- Use the Debt to Income Worksheet determine your debt level.
Insurance and Medical Expenses
Review your medical insurance so you know which tests are covered, deductible/co-pay costs, and other out-of-pocket expenses. Make a plan for how you will pay medical expense. Check sick leave balances or review leave policy at your work. Is your employer providing resources or compensation for lost wages?
Considerations for the Long-term
Do not make long-term decisions based on short-term events. Keep investment funds where they are unless money is need within less than a year. If you do need to withdraw the funds, put in short-term CDs, money market accounts or cash. Remember that your investments are savings for long-term goals. Review investments to ensure diversification.
During a health crisis, the most important thing to do now is to take care of your health and your family. Now is the time to increase savings, pay off debt and reduce interest rates to deal with or prepare for an interrupted or reduced income. Anticipate any problems you may have to meet monthly obligations and address immediately. Work to create financial wiggle room to manage unexpected expenses. Focus on making decisions about things where you have control.
Living Resourcefully with Reduced Income
- SDSU Extension
- Financial Security for All
- South Dakota Re-employment Benefits
- Income Taxes
- Expecting a refund? A free, quick, and easy way to get your refund is to file electronically and use direct deposit. File for free if your income is $69,000 or below and use Form 8888 to designate direct deposit into your savings and/or checking account.
- Anticipating that you will owe? Federal income tax payment deadlines have been extended to July 15, 2020.
- More information about coronavirus tax relief
- Help Paying Utilities
- Debt Management
- Lutheran Social Services of South Dakota, Center for Financial Resources
- Free online calculator for debt repayment plans
- Inter-Lakes Community Action Agency
- Food and Nutrition Resources
- Health Insurance
- Consumer Financial Protection Bureau (CFPB), protect yourself financially during the coronavirus pandemic
- Consumer Action
- Accredited Financial Counselor®
- Accredited Financial Counselors (AFC®) can assist clients in the process of overcoming financial debt, identifying and modifying money management habits and support clients as they work through financial challenges.
- Lorna Saboe-Wounded Head, SDSU Extension Family Resource Management Field Specialist, is AFC® certified.