How to cut expenses and create an emergency fund during COVID-19 outbreak

The Dow Jones reclaimed half of Monday's 2,000 point loss on Tuesday.  Analysts believe investors are encouraged by President Trump's proposed stimulus package to combat economic damage from the coronavirus. 

However, with so many businesses and the oil industry hurting, many people in Houston are worried they could lose their jobs.  Others are concerned they could lose wages if they're exposed to COVID-19 and are forced to self-quarantine.

We asked a financial coach with Family Houston for advice to help workers prepare for a possible loss of income.

Financial coach Monee Cheney spends her days helping families get their finances on track. She says your first step to prepare for a loss of income is to itemize your monthly expenses.

MORE: Live updating map of novel coronavirus cases in the U.S. & around the world

"By doing this, you can create an actual spending plan each month on how to spend your money so in time of crisis you know exactly what costs can be cut," said Cheney.

Then start cutting. What expenses can you reduce or eliminate? Consider things like shopping, cable tv, or eating out.

"There are a lot of individuals that eat out a lot.  Since that amount fluctuates from month to month, you can look at cutting down how much you eat out," explained Cheney.

You're probably saving some money right now on low gas prices.  Plus if you're getting a tax refund, or have canceled travel plans, you can put that money to good use.

"When you file your tax refund, you can direct deposit those funds into an account.  I would suggest putting it directly into a savings account that you don't have easy access to," Cheney said.

You can use that money to pay down some debt.

"So when there is a financial crisis you're not using some of your emergency funds to pay creditors," said Cheney. 

Or put it toward your emergency fund.

"You should have three to six months of expenses saved in case of a job loss. If not, you can try saving a small amount like a $1,000 to cover some of those smaller, unexpected expenses that might happen," suggested Cheney.

Here are three more tips from consumer advisors:

 - Save your sick days and vacation days, in case you get sick or have to self-quarantine.

 - Update your resume.

 - Avoid selling your long term investments that may have gone down recently. Experts say they usually come back up eventually.