A few months ago, you may not have thought much about strategies for managing credit balances or how much of an emergency fund you really need. But with finances strained by the coronavirus pandemic, making smart money decisions is crucial.

To better handle current conditions, ask yourself these three questions.

How much of an emergency fund is necessary?

The answer:

Even a few hundred dollars can protect you. Don’t be daunted if you have no emergency cushion or it feels very slim.

“Families with a savings cushion of $250 to $749 are less likely to be evicted, receive public benefits and miss a bill after a job loss,” says Signe-Mary McKernan, a vice president at the Urban Institute. Based on research done by the Washington, D.C., think tank found that less than $1,000 is enough to help families weather a financial crisis.

“Even small amounts of savings can make a difference, and we find that low-income families with savings are more resilient than middle-income families with no savings,” McKernan says.

What you can do:

With more uncertainty ahead, dig into your budget and make cuts so you can shore up savings.

McKernan suggests setting up automatic savings from your paycheck — even as little as 2% will add up over time — and saving any windfalls like a tax refund or bonus.

Our free and easy-to-use Goals tool in Online Banking makes it easy to figure out how much you have to save each month to reach your emergency fund goals. To access the Goals tool, activate Money Management within your Online Banking dashboard.

How does carrying a credit card balance affect my credit?

The answer:

Relying on credit cards can work as a financial bridge when money is tight, but paying at least the minimums on time is critical to protecting your credit standing.

“Your credit score is like your report card,” says Lauren Anastasio, a certified financial planner at SoFi, an online financial services company. “Every month that goes by is an opportunity for you to have a positive data point.”

What you can do:

Because late payments hurt your score the most, pay at least the minimum by the due date.

If possible, pay more than minimums so you can bring balances down over time. The second-biggest influence on your score is how much of your credit limits you’re using, so rising balances may ding your score. But that damage quickly fades as you pay them down again.

Do pay off cards completely if you can, because carrying a balance isn’t necessary for good credit. “It blows me away the number of people who say they don’t pay off their credit card because they believe it will help their credit,” says Anastasio.

If you’re looking for a card with a lower rate to transfer your balances to, try our VISA Gold Lite. There’s no balance transfer fee and offers a competitive non-variable rate of 9.90% APR ¹ . Click here to learn more!

Should you take money from your 401(k)?

The answer:

The CARES Act enacted in late March provided $2.2 trillion in relief and made accessing funds from 401(k) accounts easier. But you likely have better options for cash in a crunch.

To start, here are the recent changes:

• Those affected by the coronavirus can now withdraw up to $100,000 from their 401(k) accounts or IRAs without penalty and avoid taxes if the money is repaid within three years.
• For 401(k) loans, savers can now borrow up to 100% of their vested balance, up to $100,000. While these loans are typically due over five years, the CARES Act allows borrowers to delay payments owed in 2020 for up to a year.

But taking money from your 401(k) will stunt your retirement savings because that money is no longer earning compounded returns.

“Any loan you take from a 401(k), those are funds that are going to be uninvested while you’re paying yourself back,” Anastasio says. “Even though you’re borrowing against assets you’ve accumulated, these are funds that are designed to be appreciated over time, so there is that opportunity cost.”

And if you can’t pay back a 401(k) loan on time, taxes and penalties kick in if you’re under age 59 1/2.

What you can do:

You may have some options that won’t interfere with your future retirement plans:

• Personal loans: Unsecured personal loans are a good option for those with good to excellent credit scores and generally range from $1,000 to $50,000.
• Credit cards with a 0% period: Also typically for those with good to excellent credit, cards with 0% APR periods, which usually last between 12 and 15 months, give you access to credit without paying interest.

If you want to consult an expert on whether taking money out of your 401K would make sense for your financial situation, schedule a consultation with our CUSO ² Financial Services Advisor, Tiffany Yee, today. Email her at tiffany.cfsinvest@parsonsfcu.com or call (800) 835-3078.

¹ APR = Annual Percentage Rate

² Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor.  Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

CFS representatives do not provide tax or legal guidance. For such guidance please consult with a qualified professional. Information shown is for general illustration purposes and does not predict or depict the performance of any investment or strategy. Past performance does not guarantee future results.

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The article Strengthen Your Financial Resilience With These 3 Insights originally appeared on NerdWallet.