The Coronavirus Era: Financial Pointers for Conserving Your Cash

There are plenty of things to fear amid the coronavirus (or COVID-19 pandemic) and financial worries are probably at the top of the list. We can help calm those concerns for you with some personal finance tips to deal with this crisis.

Humans’ greatest fear is the unknown, that’s why most people fear death to some extent because none of us knows what happens after we die. There are so many unknowns with the coronavirus outbreak.
How long will it last? Will it come back? When can I go back to work? Will I have a job to go back to? Am I going to catch it? What will life look like for me and the entire world when this is all over?
We can’t answer those questions, but we can give you some personal finance tips to help you deal with the economic impact of this pandemic.
The fear we all feel is because we can’t control a lot of what’s happening, but there are some things you can control, and that can help to give you a feeling of calm.

To drift is hell, to steer, heaven.
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And there are things you can do to help yourself, your family, and your community. We have also created an article to show you where you can get financial help and other kinds of help to get you through the short-term problems you might be having.
So let’s control the things we can, that’s all any of us can do right now.

Money

Apart from health, money is probably the biggest worry for most of us. Let’s see what we can do to save money and make money.

Start an Emergency Fund

True financial emergencies that require you to dip into your emergency fund don’t come along all that often.
But with millions of people already out of work, just a few weeks into the coronavirus outbreak and millions more sure to follow, this is the time to deploy your emergency fund.

The coronavirus economic freeze could cost 47 million jobs and send the unemployment rate past 32%, according to St. Louis Fed projections.

If you don’t have an emergency fund and you’re still working, start saving for one. The minimum should be $1,000.
The standard recommendation for an emergency fund is anywhere from 3 to 9 months of essential expenses. If you’re short of the 3 to 9-month goal and still working, top your fund up to the max.

Start a Side Hustle

We’ve written a lot about side hustles and encouraged everyone to start one. Times like now are why. It’s essential always to have a source of income apart from your regular job.
Even if it’s just a little bit of money coming in, that’s better than no money coming in.
Some typical side hustle recommendations aren’t the best option right now; driving for a ride-share service, dog walking, Airbnb.
It’s not a great time to have strangers in your car, all the pet parents are home to walk their own dogs, and no one is going on vacation.
Although, you could perhaps rent your Airbnb to healthcare workers who are being drafted to help with the COVID-19 outbreak in hard-hit areas like New York and New Orleans.
You could also sell your services on freelancing sites like Upwork and Guru. What you used to do in your day job might have demand on freelancing websites.
You can tutor kids locally or around the world via Skype, something that might be in demand now that it’s unlikely that kids will return to school before the spring term ends, at least in the United States.
A lot of these sites don’t require any teaching experience, and some don’t require a college degree.

Create or Adjust Your Budget

If you don’t already have a budget, start one. If you do have a budget, you need a new one that reflects not only your situation but the situation around you and any situation you might find yourself in relatively soon.
That might mean a new budget that reflects a cut in your hours, a decrease in your commissions, or you or your partner losing their job, having their hours cut, etc.
We like Personal Capital for budgeting because you can see not only your budget but your entire financial picture in one place.

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This is the time for a DEFCON 1 budget, a budget for the worst-case scenario.

Cut Expenses

For once, cutting expenses is pretty easy. There isn’t anywhere to go to spend money. No bars, no dine-in restaurants, no clothing stores, book stores, makeup stores. All shuttered.
But you should be looking for additional ways to save money because we don’t know how long the coronavirus pandemic will last or what the economic fallout will be.
If you haven’t lost your job, think about the expenses you would cut if you had. And cut them. Here are some things you should cancel or cut now:

• Subscription boxes
• Cable (Get a streaming service which will be cheaper.)
• Landline (Some people do still have them)
• Online shopping (Essentials excluded, don’t boredom shop)
• Investment contributions (This isn’t across the board, and we’ll go into detail later.)
• Health premiums (For those on an ACA exchange insurance plan and have the premium tax credit, you can report a change in your circumstances to increase the credit, which may lower your monthly payment.)

Go through your budget and see what else you can cut or reduce, be ruthless.

Pay Down Debt

If you have credit card debt, the recent cut to interest rates is good news for you. It means your debt will get a little cheaper; you should see the difference in one or two billing cycles.
If you have extra money to throw at that debt, now is a good time to do it.

Refinance

Now may not be the time to refinance your mortgage even with the cut to interest rates. There is a cost to refinance, and things are so volatile that it might be better to sit pat for now.
But if you have credit card or private student loan debt, at least shop around to see what kind of a rate you can get on a personal loan or your student loans.

The only caveat is not to refinance federal student loans.
Once you do, the loans become private, and you lose access to the federal programs available to those struggling to make their monthly payments.
That includes the current suspension of all federal student loan payments, which lasts until September 30, 2020.

Stop Auto-Debits

If you’re in a somewhat precarious financial situation, it might be wise to stop all of your auto-debit bill payments right now. If money starts to run low, you will have to prioritize which bills to pay first and which can wait.
Canceling auto-debit will give you some flexibility to do so.

Investing

The key to being a successful long-term investor is not to make decisions based on emotion. If you play your cards right, you can come out of this whole thing ahead.

Create an Opportunity Fund

An opportunity fund is money you have set aside to invest at an opportune time. Is that time now? In a recent episode, Andrew put it well. “The deals have yet to come, but there is a sale. Right now, it’s a 10% sale, not yet, EVERYTHING MUST GO!”

Retirement Account Contributions

Should you decrease or suspend them? It depends. If you have good job security and a full emergency fund, there is no pressing reason to stop contributing to your retirement accounts.
If that isn’t the case, you may want to divert that money to your emergency fund.
The exception would be 401k funds where your employer matches your contribution. Even if you don’t have great job security and a full emergency fund, keep contributing the minimum you need to get the matching funds because the match is free money.

Stop Checking Your Investment Account Balance

There is absolutely no point in continually checking your investment accounts right now. They are almost certainly down. There is nothing you can do about it, so just ignore the numbers.

Don’t Sell

You don’t realize a loss until you sell. Right now is a bad time to sell. Buy and hold is the correct long-term strategy, and investing is a long-term game.

Think About Winners and Losers

What companies and industries do you think might come out of this smelling like a rose, and what companies and industries do you think are going to be severely affected?
I think big office towers are going to come out losers.
A lot of people are working from home, and employers are going to see some benefits to that; less absenteeism because employees with a sick kid don’t have to miss work, they can work from home with the kid.
And ill employees (not COVID-19 ill, just your regular cold and such) can work from home rather than coming in, making others sick, and making those people miss work.

Much less overhead because you don’t need to rent out 10 floors in the Freedom Tower when 90% of your employees can work remotely.

I think companies like Boston Properties, a REIT that invests in office buildings in Boston, LA, New York City, San Francisco, and Washington, D.C., are going to lose.
If you’re looking to buy individual stocks, draft up your own list of potential winners and use some of your self-quarantine downtime to do some research and build your portfolio with M1 Finance.

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College

I think it’s safe to say that the economic situation that comes out of all this is going to make the 2008 economy look positively robust. The college students who graduated in 2008 were reeling. 

The Class of 2008 was blindsided by an economic reality that they hadn’t planned on and weren’t prepared to handle.

An economics professor at UCLA posits that it can take 10 to 15 years for students who graduate in a recession to catch up, which means they won’t have a chance to catch up before whatever awaits us hits.
If you are currently a college student who has more than one semester left before you graduate, do not go back to school. Drop out, move home, and get any job you can find.
It is absolutely foolhardy to take on even more student loan debt and graduate into what may be the worst economy since the Great Depression.
You can go back when things settle down.

Think Local

If you’re struggling, look to your local community for help rather than looking to national organizations.
Your local community has a better sense of what is needed, and because it’s on the ground where you are, you may be able to get the help you need more quickly and with less red tape than national organizations.

Your Local Reddit

When I decided to move to New Orleans, the New Orleans subReddit was a great source of information.
When my parents were freaking out about the scary national media coverage in the summer of 2019 over the hurricane we were supposed to get (it never came), I told them only to get information from that site.
You know why? Because locals know what’s going on in their own back yards. 
New Orleans has a big music, artist, and service industry community, so local groups are coalescing around people in these fields.
They know what they need, and they know how to get it to them. If your city has a subReddit, it might be an invaluable source of help.

Nextdoor

This site has something of a reputation as a place for nosy neighbors to gossip and tattle on each other, and it’s not entirely undeserved.
But it’s also an excellent source for local help. You can post asking for what you need, services or skills you have to offer, and find local resources that can help if your individual neighbors can’t.

Your Field of Employment

I’ll use musicians again as an example because my city has a lot of them and like everywhere else, they’re all struggling.
Billboard put together a state-by-state list resource guide for musical professionals who need help. It also has a list of nationally available resources.

If you need help, look for help that is specifically meant for people in your field.

You will be facing less “competition” for the help that is available than you will for more general aid.

What To Do Right Now

If you’re out of work or have had your hours reduced, there are some things you can be doing while you wait to go back to work, find a new job, or are given more hours.

Give It a Rest

I’m a news junkie even in normal times. When things go south, it gets worse. I was living in New York City during 9/11, and I think I spent more time with Aaron Brown than I have with anyone in my life ever.
He seemingly never went off the air, and I never stopped watching. It wasn’t good for my mental well-being.
I find myself doing the same thing now, and you might too. Stop! Consuming all of this dire news is not helping. Turn it off, tune it out.

Volunteer

Doing something to help feels good, and there are plenty of ways to help, even with social distancing in place. If you can sew, you can make masks and gowns for hospitals.
If you’re home all day, you can foster a dog or cat. You’ll be less lonely, and in the case of a dog, it will give you a reason to get out of the house and get some exercise.
And your volunteer opportunity could give you a job lead. If not with the organization, then perhaps through a fellow volunteer or someone you helped.

Talk to Your Parents

Chances are your parents are in the high-risk age group for the coronavirus as it seems to hit older adults, particularly those with respiratory diseases, especially hard.
Now is the time to talk to them about things none of us like to talk about; wills, power of attorney, end of life wishes. 
And it’s not enough to talk about it. They need to “get their affairs in order” to use a cliched phrase.
That means getting the proper paperwork, so their wishes are carried out in the event they’re incapacitated or die. In fact, if you have a family, no matter how old or healthy you may be, you should do the same.

Learn a Skill

Given the economy that’s going to come out of this, I’ll encourage you to learn a marketable, in-demand skill.

Learning to knit is nice and maybe you can sell some of your creations on Etsy but I’m talking about learning to code or to create websites.

I know we aren’t all STEM kind of people, I’m certainly not, but what we want to do doesn’t really matter right now.
You don’t have to do something you don’t love forever or full-time, but you need to make money in a lousy economy, so learn something with the time you have that will help you do that.

When This Is Over

There are some valuable lessons we can all take away from what has been nothing short of a nightmare.

Remember Who Voted For What

Whatever side of the political aisle you fall on, remember who voted in a way that helped you, your family, and your community. It doesn’t matter if there is a D or an R next to their name.

Remember Who Acted Ethically

There are a lot of small, local businesses in New Orleans doing their best to help their employees and community even though their businesses are shuttered or severely impacted.
These are not rich people, but they are trying their damndest.
Places like Avenue Pub and Toups’ Meatery are two excellent examples, and it would take up too much space in this article to tell you the wonderful things they’re doing, but I wanted to shout them out.

When this is over, remember which businesses deserve your money and which don’t.

Compare them and those like them in your community to people like Jeff Bezos and how he treated Whole Foods employees. 

Remember Who Matters

Do you know who was doing something to help you? The people in your community who work in grocery stores, gas stations, pharmacies, and other businesses deemed essential.
How many of them make a living wage? It’s obscene that these people literally put their lives in danger to make less than enough money to live on.
Join the fight to make sure they get paid better than the least their boss can legally pay them. It’s wrong, and it’s immoral.
There is dignity in any job.

Remember How Much Free Fun You Had

You can’t really do all of the things many of us do for fun right now; have drinks, go to dinner, attend a concert or sporting event.
But did you just sit staring at a wall for weeks or months on end? Hopefully not. So what did you do?
Follow a live dance party or work out on Instagram or YouTube? Make playdough with your kids? Have cocktails via Zoom with your friends?
Rember all of the ways you were able to have fun, or at least pass the time, without spending any money and keep doing them.

Look at How Much Money You Saved

A long time ago, I wrote an article about saving money and noted that the only time I left the house without spending money was when I went running.
If you think about it, the same might be true for you. But now, you (mostly) can’t leave the house, and even if you could, there’s (mostly) nowhere to spend!
Go through your budget for February and March. How much did you save? Yeah. Pretty eye-opening, isn’t it?
I’m not saying don’t blow it out when this is over. I’m going to run up and down Bourbon Street in a tutu and a tiara with a bottle of champagne licking random hot people the second we get the all-clear.
But do I really need to get my nails done every three weeks, my hair cut every five weeks, go out to dinner or drinks a few times a week? Well, yes, I do.
But I need money more, so I’m going to cut all that back. It (just barely) didn’t kill me to skip those things during the lockdown, so I will survive even if I cut back a little, and you will too.

Be Smart

If you’re reading this, you’re smart. You went looking for some financial advice, and I hope what you found was helpful. Keep being smart.
I know it’s hard when you’re running on emotion, and the primary emotion is fear. I’m scared too.
Keep being smart, don’t make any rash decisions, don’t make any significant decisions in the midst of all this. My hope for you and all of us is that we come out of this having learned some lessons and not having suffered too much.
Be smart and look for the good. There is still plenty to be found; we just have to look a bit harder. Keep looking.

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