As COVID-19 continues to tear across the nation, most everyone has been hit hard by this unprecedented event — especially terms of financial security. Not only have many people lost their jobs thanks to business closures during the pandemic, but the oil war and resulting economic downturn have caused the foundations of many small businesses around the country to crumble. Because we can’t be certain when the threat of the coronavirus will dissipate, many people are beginning to fear for their finances now and for well into the future.
Fortunately, there is hope: Financial experts are quite confident that certain behaviors will worsen individuals’ financial plight, while other behaviors will keep people financially secure for much longer — even through the end of this crisis. For those who are beginning to panic about their financial circumstances, consider the following dos and don’ts:
Do Use Your Emergency Fund, if Necessary
Financial experts everywhere advocate saving up an emergency fund, flush with between three and six months’ worth of expenses. This fund is meant to function as a financial parachute, so you can keep your home and car even if you suddenly and unexpectedly lose your income. Well, the new coronavirus has forced millions upon millions of Americans to suddenly and unexpectedly lose their income. If you need to, you shouldn’t feel bad about dipping into your emergency savings to pay for necessities like food and utilities.
Do Try to Put Your Bills on Hold
Many governments are suspending debt as the disease rages, ensuring that citizens don’t need to worry about major expenses like mortgages or student loans while they are out of work due to COVID-19. Unfortunately, the United States hasn’t followed suit. Still, landlords and lenders have largely been understanding about the current circumstances and have been more willing to offer leniency on rents, mortgages and other payments. If your accounts haven’t already contacted you, you should reach out to discover your options for putting any bills on hold during this crisis.
Don’t Make Major Purchases
With fewer bills to pay and an emergency savings account to spend, you might feel particularly wealthy. Worse, because you can’t leave your home, you might turn to dangerous pastimes like online shopping or home renovation. For now, you should avoid unnecessary expenses, especially large and expensive purchases that require you to draw on savings. Instead, you should buy only what you need to survive and thrive.
Don’t Stop Saving
Many Americans will find it difficult to contribute to their savings goals in this time of crisis — but difficult is not the same as impossible. Especially if you are continuing to earn income and if your emergency savings isn’t as robust as experts advocate, you should steadily add to your savings as you can. Some experts have even revised their estimates, believing that for this particular emergency, you might need as much as three years’ worth of expenses saved up, so the more you can save, the better.
Do Use Management Tools
Adult financial literacy in the U.S. is about 57 percent, meaning almost half of American adults simply don’t know how to manage their money. If you are on the precipice of experiencing financial hardship due to COVID-19, you should seriously consider obtaining money management software to help you better understand your financial situation and make smarter choices with your money. Free and paid tools make it easier to build budgets, pay bills and perform other essential services, so you have a way to stay accountable to your financial goals.
Don’t Pretend Like Everything’s Normal
Not only has the pandemic changed life in the present, it has likely irrevocably changed the future, as well. If you have lost your job due to the coronavirus, you cannot be certain when your job will be available again — if it ever does become available again. By tightening your belt right now, you could ensure that you keep your home and family safe for as long as possible. Meanwhile, those who doubt the seriousness of the disease or their own financial straits could jeopardize their health and stability in both the short and long term.
Even as this pandemic drags on, it is imperative that you keep your mind on your money. By making informed financial decisions, you can protect your future from further disaster and survive and thrive for the duration of this crisis.