The COVID-19 coronavirus has caused a lot of financial uncertainty in American households. Many cities are locked down to essential services and workers are staying at home.
It’s likely you have financial questions about what this all means for your personal finances. Below are some of the most important things to look at while things are so uncertain.
Don’t Touch Your Investments
When the economy is turbulent, experts say the best thing you can do is not touch your retirement account. Stocks tend to perform well over the long term. That means you’ll likely be able to recover from the current stock market lows over time.
Many employees automatically contribute to their retirement accounts from their paycheck. But if you’re worried about your finances right now, it may be time to slow those down.
Divert more money to an emergency fund if you don’t have one already.
Keep your investments where they are and weather the storm, say experts. Don’t try to time the market. Trying to ride the waves of a bumpy stock market can result in much bigger losses if you’re inexperienced.
Emergency Fund
It’s now more important than ever to have an emergency fund. An emergency fund should cover your expenses for up to 3-6 months if you lose your job.
That may seem like a lot of money! But starting to save even a few dollars each month is important.
Your savings can add up quickly. Even if it only covers a few weeks of groceries in tough times, you’ll be glad you started early.
Some ways to find extra money for an emergency fund right now include:
- Check your cable and internet bill. Maybe you can cut back on channels and internet speed for a few months while things are tight.
- Buy food in bulk instead of making weekly grocery trips. Staple foods are much cheaper in bulk and can be stored.
- If you’re working from home, use your gas savings for your emergency fund.
- Reduce your streaming services to just one or two for the family.
Assess Your Debt
Unfortunately, your debt payments are still likely due during the pandemic. But don’t panic!
Some credit card companies and debtors are helping out in these stressful times. Organize all of your debts and lenders into a spreadsheet. Then sort it by your highest interest rate first. This is likely a credit card you have.
Take time to reach out to each of them. See if they’re offering any programs to defer interest payments or similar during the pandemic.
Student loan providers are also developing programs to help those with outstanding student loan debt.
Additionally, avoid taking on new debt. This means avoiding your credit cards unless you need them or taking out a car loan.
Revisit Your Household Budget
During a difficult time like this, your budget is likely shifting. Your budget should be a living document that reflects your current financial situation. Don’t think it stays the same every month!
Spend time looking at your monthly expenses and evaluate what’s changed.
With many restaurants and businesses closed, your restaurant and drycleaning bills may be non-existent. Similarly, your entertainment budget may be lower but your groceries could be costing you more.
Move money around to bolster your emergency fund and take care of other areas of your budget.
If you have a partner, also talk to them about their current wants and goals. With this much time indoors, it could be a good time to talk about your future plans again.
Unemployed or Reduced Hours?
Millions of people filed for unemployment this week. And that doesn’t include the millions of hourly and freelance workers without work as well.
Losing work is stressful. But know that you’re not alone and there are processes in place to begin rebuilding.
First, if you lost your job you should contact your state’s unemployment office. Here is a full list of unemployment offices throughout the country.
These offices have received an unprecedented number of phone calls over the last few days. Prepare to wait on hold if you call. You can also likely file online to avoid wait times.
Secondly, at the time of writing a stimulus package is being worked on by Congress.
This economic stimulus would provide unemployment benefits and relief for many Americans.
More than anything, it’s important to stay calm. Things are difficult, but keeping a level head will help you continue to make confident decisions.
Don’t feel overwhelmed by all of your financial pressures. Take it one step at a time and review your finances each week. Continue to adapt your budget to your needs and don’t be afraid to reach out to lenders and service providers.
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