When COVID-19 became widespread, many employers had to shut down to protect employees and customers from becoming infected. These temporary closures led to worker furloughs and a reduction in their wages and salaries. If you were furloughed, you can still manage your finances and use your savings wisely. Here are some realistic tips for staying on top of your monthly bills during this time.

What Is a Furlough?

A furlough occurs when a company reduces an employee’s wages or work hours for a temporary period. Furloughs are typically activated if a business isn’t experiencing strong financial health. The paycheck change may also occur if the economy is weak or if a pandemic causes companies to scale back on expenses. 

While the terms “furlough” and “layoff” are often used interchangeably, they are quite different. When employees are placed on furlough, they still work for their respective companies. A layoff results in a job loss, which means an employee has been terminated from working for their employer. 

During a furlough, employers may still provide their employees with benefits such as health insurance and retirement savings. Continued accessibility to health insurance will depend on the type of plan offered by the company. For instance, insured group health plans may maintain coverage during a furlough period, while employers with self-funded group programs can opt to suspend coverage.

For retirement, life insurance, disability, and other benefits, the same options will typically apply. Continued coverage to employees will be based on the type of benefit and whether the employer decides to cover a percentage of the costs.

How to Manage Finances

To help recoup some of your reduced pay, apply for unemployment as soon as possible. The U.S. Department of Labor and your state’s unemployment agency are your best starting points.

Contact your mortgage lender or landlord to let them know you’ve been furloughed. They may be willing to grant you an extension. Reach out to credit card providers, car loan companies, and other organizations you pay regularly. Let them know about your situation and ask for a payment deferment.

Take a look at your spending habits and determine where you can cut costs. From gym memberships to transportation passes, you may be able to eliminate some of these fees, especially during isolation.

If you’ve built an emergency savings fund, take advantage of it. If you don’t have one set aside, consider applying for a personal loan to tide you over during the furlough period. 

If you’ve been furloughed due to COVID-19, stay financially afloat with the assistance of First State Bank in Russellville, AR. Serving the River Valley, the locally owned community bank makes all of its loans, savings, and other financial decisions in-house. You can count on personalized and confidential service to help get you through tough times. Call (479) 498-2400 to speak to a representative, or visit the website for the latest COVID-19 updates.