This is not a drill. A global pandemic has hit and our economy is taking a nosedive. Many small businesses have been ordered to close their doors. Schools and daycares have closed, leaving parents without care for their children. Parents are having to homeschool their children and many two-income households are now down to one income.
Meanwhile, grocery store shelves are being cleared, there is a mad dash for toilet paper, people are beginning to worry about their financial health, and rightfully so. Stockpiling tissue and canned goods won’t help your finances. In fact, overbuying has put some families into more debt. Here are a couple of tips that will help ease the financial panic.
Save. Save. Save.
Unless you are an essential worker with awesome insurance coverage, I would suggest you save every penny. Focus on building your emergency fund as much as possible. It never hurts to have an easily accessible amount of money. This is truly the time to put away as much of your dollars as possible.
If you are paying off debt right now, STOP making extra payments. Pay the minimum balance on your loans. Most federal and private loan companies are waiving fees, interest, and payments at this time. According to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was recently passed, student loan borrowers would be able to put off their federal student loans without a penalty until September 30, 2020. However, before you decide to stop making payments on student loans, call your loan providers to see what options are available, and then create a debt payment plan that works best for your situation.
Don’t give up on the budget. Instead, prepare a Barebones Budget. A Barebones Budget is a budget that only covers the necessities. This includes home expenses, transportation, basic clothing, and food. I would even go as far as to add Netflix or Hulu as an exception during these unprecedented times. Many families are spending much of their time at home due to shelter in place guidelines and need some sort of entertainment. Disney plus may even be an option for parents who need an outlet for their children during the quarantine.
Cut other unnecessary subscriptions and memberships from your budget. Call your phone, insurance, and internet providers to see if they have any special programs to help reduce costs during this time. Once you have cut costs as much as possible, start putting money in a high yielding savings account to build up your emergency fund.
Be Mindful of Price Gouging
It is certain that in hard times someone will try to profit off of the pain of others . Some stores are raising the price of necessities to astronomical numbers. Others are taking advantage by buying hand sanitizer and toilet paper in large amounts only to upsell these items on Facebook Marketplace and eBay. Don’t pay extra for overpriced items. Scan your home for items that serve multiple purposes and save that extra money and time. Don’t let scammers profit from the fear of others.
Prepare for the Worst-Case Scenario
The worst-case scenario is that someone you love dearly is infected with Coronavirus and dies. While this is unlikely to happen, it’s always good to be proactive and protected. This is a great time to look into life insurance or check the coverage on a current insurance policy. While you are updating your life insurance, go one step further and create or update a Will. Having these ducks in order will lessen the stress and financial burdens that can be associated with the death of a loved one.
Look for Alternate Ways to Bring in Money
Are you one of the millions of people at home and without work or with reduced income? This is a perfect time to work on a side hustle. Many people have extra time to dive into their passions full time and provide a service or product that the community currently needs.
Many Americans are looking for part-time work and there are a few industries that need major help. These include the delivery sector, grocery sectors, and of course anything Amazon related. Having a side job or side hustle can help meet the basic needs that many families are looking to meet during these uncertain times.
Help A Small Business
Some of us are fortunate enough to still have a job and a fully-funded emergency fund. If this is the case for you, consider helping save a local business. Even with government aid reportedly on its way, many small businesses have determined they will not be able to reopen. If there is a small business near you that you would like to support, reach out to them. Some of the businesses are taking donations via GoFundMe or are selling their products online.
Jump on board. Right now is a great time to invest. This is assuming you have a hefty emergency fund, little to no debt, and extra money to do so. Many stocks have fallen to record lows, making them affordable and great for “Starter Investors”. Taking advantage of the record lows could potentially mean doubling or tripling your investment in years to come.
I am not a Financial Advisor so before you go and buy all the stocks, do some research, and reach out to an advisor to solidify your strategy. Investing is a long term game and Index Funds tend to be the ideal investment strategy for those who don’t want to actively manage their investments.
If you have money already invested in the market, do not check your portfolio every 30 minutes. Market cycles have shown that the stock market is bound to go up again, even with the major dips we’re seeing right now. Fixating on your losses will only cause anxiety and add to the stress that many Americans are already feeling. Don’t touch your face and don’t touch your retirement accounts. Period.
The easiest thing to do during a crisis is to go into straight survival mode. It’s part of our human nature to make sure our needs our met first. And that’s completely normal. There’s a reason flight attendants tell you to put your mask on first. But oftentimes, we are so focused on self that we forget there are others around us who may need help as well. If you are fortunate enough to be in a good financial position during this crisis, make it a goal of yours to be sensitive to the needs of others. Look to see if there is anyone you can lend a helping hand to. It may be a family member, a friend, a neighbor, or a complete stranger. Offer to buy them groceries or pay one of their utility bills.
But giving involves more than just money. Volunteer your time and skills. Offer to go grocery shopping for them if they’re unable to. Find ways to share your skills and knowledge to those who need it. I’ve seen examples of individuals making masks and sharing financial tips online. These are the times that we get to truly treat our neighbors as we would like to be treated. We’re all in this together.
The most important thing any of us can do right now is to buckle down and make smart financial decisions. Save as much as you possibly can, update your legal documents, invest if you’re in the position to, and avoid scammers. These are difficult times, but let’s focus on the things we can change versus the things we can’t.
This article was last updated on 5/5/2020 to include the last category of giving. The name of the article was updated to reflect those changes.