14 Apr 6 Tips for Coping with Money Stress & Protecting Your Finances from COVID-19
It’s all over the news and included in almost every conversation these days: Coronavirus.
COVID-19 has completely changed our lives…leading us to practice social distancing…
…closing schools and businesses…resulting in many of us being forced to work from home or become temporarily unemployed.
As a result, you might be facing significant financial stress…
…worrying about the income you’re losing…when the money will start coming in again…and how to make ends meet until then.
I’m here to help with that.
I can’t make all your worries go away…or solve all the financial problems you’re facing…
…but I can offer some tips to help you cope with money stress and advice on what to do with your finances right now to protect them from the impacts of COVID-19.
6 Tips for Coping with Money Stress & Protecting Your Finances from COVID-19:
1. Stay Calm.
Money ebbs and flows…and this time of decreased income is temporary.
Think of it this way: If your partner goes away for a few weeks, you don’t freak out…or end the relationship…or get all clingy and needy.
Nope. You let your partner come and go freely…knowing and trusting that he/she will be back.
Same goes for your money. It’s like your money has gone away for a few weeks…but it will be back. This will all blow over and you and your money will be reunited once again.
2. Trim Expenses.
Now is not the time to stock pile months of groceries, supplies, or toilet paper.
It’s not a good idea to pass the time at home with online shopping.
Now is the time to reduce monthly expenses as much as possible so your money lasts as long as possible…especially if you’ve lost income as a result of COVID-19.
Cancel subscriptions and memberships. Only buy what you absolutely need.
For more ideas on how to reduce expenses, read this post: 14 Ways to Add Hundreds to your Budget Every Month.
3. Use Your Emergency Fund if Needed.
Emergency funds are designed to protect you from going further into debt (or back into debt if you are living debt free) when unexpected expenses pop up.
No one saw Coronavirus coming. It was completely unexpected and your emergency fund is there to help bridge the gap between now and the time when you regain income.
But what if you don’t have an emergency fund?
This is the best time to start one! Or, at the very least, make a plan to create an emergency fund when your finances recover from this.
Rule of thumb: Start your emergency fund with just $1,000 and keep it in a savings account. Once ALL your debt is paid off, grow your emergency fund to 3-6 months of living expenses.
If you don’t have an emergency fund to get you through this tough time, look for 0% interest credit cards that you can use to float living expenses.
4. Access financial resources.
You’re not alone in this. Coronavirus effects us all…and the government knows that…
…which is why there are several types of financial relief options currently being made available.
Congress passed the Coronavirus relief bill that extends unemployment eligibility, paid leave time, and tax credits to independent contractors and owners of small businesses.
It also provides free testing for COVID-19 to those without health insurance and food assistance to those in need.
The government has also ordered that interest be deferred on all Federal Student Loans and you are eligible to place your student loans in forbearance for up to 6 months without penalty.
If you’re having a hard time making ends meet right now, contact your student loan company and request a forbearance, then use your student loan payment money to cover living expenses.
5. Look for financial opportunities.
There is good in every situation…including this one.
As a result of the stock market dropping, interest rates are now incredibly low…which isn’t great news for your investments…but it’s great news if you want to take out a loan.
This is the perfect time to buy a house…refinance your mortgage…or apply for a personal loan of Home Equity Line of Credit (HELOC).
Refinancing your mortgage to lock in a lower interest rate, for example, can save you thousands over the life of the loan.
Rule of thumb: If you can secure an interest rate 1-2% less than what you currently pay, it’s worth it to refinance.
This is also a good time to invest more in the stock market…because you can buy stocks at a low price…and watch your investments grow by leaps and bounds once the market recovers (and it absolutely will recover).
If you haven’t lost income…or you have extra money on hand that you don’t need right now…put those funds toward stocks.
6. Don’t touch investments.
Keep your hands off your investments.
Please…please…don’t panic and withdrawal from your 401(K) or other investment portfolios.
The loss of money you’ll experience as a result can crush your finances worse than the impacts of Coronavirus.
Leave your investments alone.
And don’t look at what the market is doing. Just ignore it.
You’re going to see ups and downs over the next several months…and that’s ok. Increased volatility is to be expected right now.
Ride the wave and hold tight. The market will bounce back…as will all your investments…and everything will be okay.
I hope these tips are helpful for you and give you a sense of control…and a sense of comfort that you’ll be okay.
I’m here to help you and will be sharing more information about what you can do to stay financially (and emotionally) well as things change over the next several weeks.
If you have a specific problem you’re dealing with right now…and could use some help…or just want to talk through it…
…please reach out to me!
I’m just sitting at home with my two kiddos…trying to come up with at-home science experiments and keep them from killing each other…and I’d be happy to chat with you about possible solutions to whatever challenges you’re facing.
Hang in there…we’re all in this together.