As COVID-19 continues to impact virtually everyone on the planet, concerned individuals are making lifestyle adjustments in an effort to curb the spread. While there are many factors of this pandemic we cannot control, practicing social distancing and creating new routines to remain physically and psychologically healthy are just a few of the actions we can take.
Practically every part of our lives has been affected by the pandemic, including the economy. While we cannot control the fact that businesses are temporarily closed and the market is volatile, we can control our personal finances - adjusting spending or simply being more mindful during these unsteady times.
So, how should you mange your money during this pandemic and economic uncertainty? Here are six tips:
Tip #1: Remain Objective & Focus on Your Personal Economy
With the market in flux, it can feel tempting to make moves to “protect” your money by selling stocks or switching to different investments. However, if there is one fact that remains constant with regard to the market, it’s this: the market will go up, and it will go down. Remembering that your investment plan was setup to fulfill long-term goals, not short-term gains, can be helpful to avoid succumbing to an emotionally driven investment decision. If you’re feeling uncertain or anxious, it’s always a good idea to chat with your financial advisor to make sure any decisions are in line with your ultimate long-term well-being.
Rather than overly focusing on the market at large — and on factors that we cannot control — try shifting your mindset to your own personal economy. This can include components of your financial life such as your budget and your savings, topics addressed more below.
Tip #2: Review Your Emergency Savings Fund
An emergency fund is intended to help in the face of unexpected circumstances, such as an accident, loss of income, a health emergency, or a home repair. These savings can assist in both small and large unplanned expenses that come up and are not part of your usual bills and spending.1
Whether or not you are currently confronting a dire financial situation as a result of COVID-19, it’s a good idea to make sure you have adequate savings, or begin building a robust fund if you don’t already have one. In the context of a global emergency, especially one that has the capacity to affect every individual’s health or job status, the risk of the unexpected is higher than usual. Making sure you and your family would have enough in case of an emergency is one way to stay proactive and prepared. Typically, recommended savings should be enough to cover 3-6 months of essential expenses, depending on factors such as the number of household incomes and job security confidence. With the current COVID-19 situation and the number of potential unknowns, more is better.
Tip #3: Consider Updating Your Estate Plan
Though estate planning is no one's favorite topic, a global public health crisis gives most people pause to consider their own mortality. Wherever you reside in the U.S., you should have a Will, an Advance Medical Directive (Living Will), and a Power of Attorney in place at a minimum. With individuals hospitalized as a result of COVID-19 often needing a respirator, it is a good time to consider the measures you want taken to try to save your life and make your wishes known. Remember, your estate planning documents are there to make things easier on your loved ones in a difficult time and to carry out your wishes when you are unable to express them on your own.
Tip #4: Be Aware of Scams
Many scammers are attempting to capitalize on fears arising as a result of the coronavirus. Scams include vaccination offers, home test kits and other products to treat or prevent the virus. Other scams capitalize on the fact that so many individuals are now working from home, and try to push remote work schemes.2 Sophisticated scammers can disguise as notable organizations, such as the World Health Organization or Internal Revenue Service (IRS), in an attempt to steal money or sensitive information.3 These various scams can come from robocalls or online offers. The Federal Trade Commission suggests hanging up on robocalls, ignoring online attempts and fact-checking before sharing information related to COVID-19. 2
Tip #5: Review Your Budget
Even if your job status has not changed and your income remains steady, consider reviewing your budget, cutting unnecessary costs and taking advantage of extra money leftover each month. The lack of restaurants, bars and stores to visit may mean you now have greater disposable income. You might consider adding to your emergency savings fund or increasing your retirement fund contributions. Additionally, if you have the means, consider exploring donation options to provide assistance and help others, such as food banks or groups supporting hospitals and health facilities.
Tip #6: Stay Informed Regarding Available Resources
In response to COVID-19, governments are passing packages to support families, individuals and businesses. In the United States, the CARES Act includes extended unemployment benefits, healthcare aid and one-time stimulus checks for individuals with adjusted gross incomes up to $75,000 (single), $150,000 (joint), or $112,500 (heads of household).4 The tax filing deadline has also been extended to July 15, 2020. In the case that you or someone you know qualifies for or is in need of assistance, stay up-to-date by reviewing the federal government’s official resources for information.
As we collectively confront this global emergency, you can take steps to remain both physically healthy and financially prepared. If you have concerns about investments, building an emergency fund or government resources, reach out to your financial advisor, your workplace, or a qualified professional to better understand your options and benefits.
Interested in receiving TriPrescient Insights right to your inbox? Add your name and email address to our mailing list in the form below, and we'll send you an email when new articles are posted.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.