More than 60% of Americans are worried about money, thanks to the ongoing COVID-19 crisis, according to a recent survey by our sister site, TheAscent.com. Part of the reason is that many have spent meaningful sums stocking up on essential supplies, which has stressed their budgets.
If you’re among those wondering how to handle your finances in these troubling times, read on — for guidance and 12 recommended actions.
Image source: Getty Images.
No. 1: Stock your emergency fund
Let’s start with an emergency fund. You have one, right? If not, you should aim to establish one, and to fund it with at least three to six months’ worth of living expenses (if not more). If you do have an emergency fund, get it well stocked. The pandemic has shown us how fast a job loss or health setback can occur, and such events can wreck havoc on our financial lives.
No. 2: Rein in your online shopping
Next, many of us have been busy doing a lot of shopping online, as going to stores is not recommended. That’s convenient and helpful, but it can also be problematic, as it’s dangerously easy to click “buy” over and over, securing things we may not need. Resist the urge to buy things you don’t actually need now or soon. And remember to be a smart shopper, seeking discounts and deals, comparing prices at various retailers, and using coupons.
No. 3: Live below your means
It’s more important than ever to live below your means, so as you go about your financial life, be mindful of opportunities to spend less and perhaps bring in more. The aim is to spend less than you bring in — ideally while working toward goals such as retirement savings. Building a budget can be very helpful, and so can some creative thinking, which can help you discover lots of ways to spend less.
No. 4: Avoid taking on debt
If you’re deep in debt, it’s always best to get out of debt as quickly as possible — and the less debt you have in an economic crisis, the better. Note, though, that the really problematic debt is high-interest-rate debt, such as that from credit cards — not a low-interest-rate mortgage. During the coronavirus crisis, be extra careful to take on as little new debt as possible. And if you’re struggling to pay off debt, try contacting your creditors, as they may be willing to work with you to reschedule repayments or offer a little relief.
No. 5: Support your favored local businesses
It’s inevitable that you’ll have to buy things in these months — essential things and even discretionary purchases. If there are local businesses that you value — such as local bookstores and restaurants — aim to buy from them instead of from huge national companies. Many small businesses will not survive this crisis, but the ones that do will do so with the support of loyal customers. Even if you don’t need products or services from local businesses today, you might buy a gift certificate, hoping to use it later.
No. 6: Seek sources of income
Whether you think your job is very secure or you’re worried about losing it, consider looking for additional sources of income. They can be a lifesaver in case your household loses a job or faces unexpected expenses. There are many long lists of possible side gigs, and a little time spent thinking creatively can turn up other ways to make money. You might do deliveries a few evenings a week for a local eatery or supermarket, or you might tutor kids online or sell crafts you make at home.
Image source: Getty Images.
No. 7: If you need relief, seek sources
If you’re stressed out and really struggling financially, look for help. A little time spent online can turn up a bunch of possible relief, such as information on mortgage forbearance (which allows you to pause payments), penalty-free withdrawals from retirement accounts (though borrowing from a retirement account should be close to a last resort), and expanded unemployment benefits. There are other relief options for small businesses, students, and many other people and entities.
No. 8: Buy stocks if you can
If you’re fortunate enough to be financially secure and you have some extra cash, consider buying stocks that have fallen due to the crisis. Market crashes offer great investment opportunities for those able to buy.
No. 9: Create a watch list of stocks you might buy
If you’re fairly financially secure, but not ready to invest in stocks now, consider starting a watch list of appealing portfolio candidates. This can serve you well throughout your investing life. Whenever you run across an attractive company, do more research into it, and if you find that you’d like to own it one day, add it to your list, perhaps noting at what price you’d be willing to buy it. Revisit the list regularly, as many stocks will be falling further in the months ahead, while others will regain lost ground.
No. 10: Donate to others if you can
Those of us lucky enough to not be stressed out about our finances should consider aiding those who are less fortunate. There are many lists online of organizations that can put your contributions to good use, and you can probably find other, possibly more local, options.
No. 11: Avoid costly scams
It’s also important to be extra vigilant and not fall for the many coronavirus-related scams out there. Some are trying to get your stimulus money or Social Security benefits, while others are hawking fake cures and treatments for the disease. Most are after your personal information in order to steal from you, trying to get it by alarming you about some false danger. Get informed and be wary.
No. 12: Consider delaying retirement
Finally, no matter what your financial goals and plans were before the crisis, you may need to rethink them. If this period of economic upheaval has wrecked havoc on your finances, perhaps depleting some retirement accounts, you may need to delay your retirement by a few years. That may not be an appealing possibility, but it can be a powerful move, allowing you to sock away more money (perhaps while keeping your employer-sponsored health insurance coverage) and letting your nest egg support you for fewer years.
This period of coronavirus-related changes in many aspects of our lives is likely to hurt you financially in a few or many ways. But if you read up and prepare, you may end up less hurt, and financially better off.
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