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We’re all in unchartered territory with a pandemic that has wreaked havoc across the globe on both the public health and economic fronts. Schools across the nation are closed, and many educators are on stressful double duty: teaching from home and juggling their personal-life responsibilities, like parenting. And with job losses at Great Depression levels, workers like educators also have financial security weighing heavy on their minds.

When the economy was initially shut down (except for essential services), job loss impacts were concentrated in the restaurant, retail, and travel industries. The second wave of layoffs and furloughs now is hitting additional commercial sectors, as well as government and academia. Already some jurisdictions have laid off or furloughed public sector employees due to a dramatic drop in tax receipts. The pain could come to education because state and local budgets that fund public schools have been decimated. Meanwhile private schools, colleges, and universities are worried about fall enrollment and the impacts on their budgets.

Public school districts typically deal with budget shortfalls by declaring hiring freezes, canceling vendor contracts, or adopting efficiency measures. But labor costs comprise 80% of K–12 costs. If the budget gaps are significant, experts predict that public school districts may ultimately have to cut personnel (more here). For higher education, announced furloughs haven’t yet eliminated faculty, but reductions in pay and benefits could be coming (more here). 

Given this outlook, educators can act now to fortify their personal finances to prepare for any potential impacts to their household income—whether from cuts to teacher income or from a partner’s employment situation. 

Create a bare-bones budget. Previous columns have covered the importance of developing a detailed household budget to understand precisely in what budget categories you are spending. If you haven’t created a budget, do it now. The next step is to assess what expenditures are essential (housing, car payments, utilities), what aren’t (clothing, streaming services, travel), and items for which you can reduce spending (mobile phone, food). If you carry debt, research what options are available for potentially deferring payments, as many banks and credit card issuers are offering relief. (Learn more here.)  This could help reduce monthly obligations. Ultimately, the goal is to determine the exact amount you need each month so you can plan accordingly for any income cuts.

Start or augment your rainy day fund. Most Americans have less than $400 saved for an emergency. This becomes increasingly problematic for anyone facing a salary cut, furlough, or job loss. One step to take now is to trim all non-essentials and start using that money to potentially cover essential expenditures. The sooner you start, the more you’ll have saved. And if you ultimately don’t need that savings, consider reserving that money for another rainy day.

Look at your financial big picture. In addition to your income, you may have other assets, such as your home or retirement savings. In some cases, it may make sense to look at refinancing a home mortgage. Refinancing a mortgage means exchanging an existing loan for a new one at a lower interest rate, and rates now are historically low. This could reduce monthly payments, which could be helpful if your income decreases. A word of caution: Closing costs apply to a refinance, so it’s important to do the math to ensure a refinance is worthwhile. Also keep in mind that it’s getting harder to refinance during the economic crisis. (Read more here.)

When it comes to retirement savings, experts agree that tapping into this nest egg should be an absolute last resort. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows for penalty-free withdrawals of up to $100,000 from certain individual retirement accounts or borrowing up to $100,000 or 100% of the vested balance. But if you take out a loan and can’t repay it, you’ll be hit with a 10% early withdrawal fee. You’ll also be double-taxed on the money you pay back.

If you withdraw retirement savings, the impact could be worse. You’ll have to pay taxes on any withdrawn funds. While these tax payments can be stretched out over three years, this could create an ongoing financial burden. In addition, the retirement savings you use will no longer grow to help finance retirement.

Understand available financial assistance. Hopefully, your job (and your partner’s) will remain safe. But it’s prudent to hope for the best and prepare for the worst: a job loss. You may already have received government stimulus check worth up to $1,200 per person and $500 per dependent child. If you are working, consider depositing this money in your rainy day savings account should anyone in your household experience a job loss. And Congress may provide additional stimulus payments, which could further bolster your savings.

It’s important to understand unemployment benefits that are available in the event of a job loss. The CARES Act provides an extra $600 per week to workers receiving unemployment during the COVID-19 pandemic. The law also extends unemployment eligibility by up to 13 weeks, and it expands who qualifies for unemployment.

To get ahead of the curve, visit your state’s unemployment website now to understand the unemployment process. These agencies and their websites currently are inundated, so it’s a good idea to do the research now. Some states require workers to apply on specific days to avoid overwhelming the system, and states typically require submission of personal information like your Social Security number and past employers. Once an application is submitted, the state agency sends a notice explaining if you qualify, how much you can expect in benefits, and for how long you can receive benefits—and this varies by state. (Learn more here.)

Times are tough. But investing time now to plan for a worst-case employment scenario likely will help lessen any financial blows. Wishing you good health and job safety. 

Kelly Kenneally has 25 years of public policy experience including serving in the White House. She has worked for more than 10 years with nonprofit organizations to help improve Americans’ financial security.

This article originally appeared in the May 2020 issue of NSTA Reports, the member newspaper of the National Science Teaching Association. Read the full issue now.