A Financial Guide to Getting Through a Pandemic: A Money Expert Shares
Firstly, we hope you are safe, healthy, and keeping as sane as possible during these crazy times. The team here, like all of you, are home with family in Hoboken and beyond in an attempt to practice social distancing to the fullest effect. Amidst all the fear and stress about COVID-19 itself, however, many of us also have very real financial worries. There has been so much going on with the economy, it’s hard to keep up and truly understand what impact all the changes will have on our lives in the coming months. Luckily, Ashley Feinstein of The Fiscal Femme is here to help. She’s sharing a few top tips to help all of us financially get through COVID-19 and answer one very important question — what should we be doing now to protect ourselves and our communities during this crisis?
What’s Going on With the Economy
Before we dive in, Ashley is sharing just exactly what is going on with the economy to help us all better understand it.
The Market is Going Bananas
You may have heard that the stock market has been really volatile and for the most part, is going down. This can be {and usually is} really disconcerting to us as investors. It’s hard to login to our accounts and see the value of our investments decrease by so much.
That being said, mostly uncertainty, and the expectation that COVID-19 will have a big impact on our economy.
The Federal Reserve Lowered Rates to Almost Zero
In response to everything going on, on March 15th, the Federal Reserve lowered interest rates to almost zero. The Fed is our central banking system and its main job is to prevent and alleviate financial crises.
The Fed lowered rates in order to stimulate the economy. What that really means is it is trying to get us and companies to spend our cash, instead of invest or save it.
A Global Recession
On March 17th, S&P announced that we are in a global recession. For those of us who experienced the Great Recession of 2008, that brings up a lot of bad memories. For those who are unfamiliar with it, however, a recession means two consecutive quarters of negative GDP {gross domestic product} growth.
People Are Worried About Their Income
There have been a lot of changes in the business world following the pandemic. These include complete closures of physical locations, companies cutting employees’ hours, and many laying off staff. In fact, as of April 2nd, almost 10 million people have filed for unemployment. Freelancers and entrepreneurs may already be seeing decreases in income and even salaried employees are worried that their jobs are next.
What We Can Do
The fact of the matter is that with all this uncertainty, most of us are not quite in the mood for a spending spree. We are looking for answers. Here are six things we can do to protect ourselves and our communities financially.
Check-In With Your Rainy Day Fund
First and foremost, the most important thing we can do right now is take a look at our rainy day {or emergency} fund. If you don’t have one yet, that’s OK — now is the time to start saving. Or maybe you had three months of expenses in there before and that felt like enough, but with all this uncertainty you’d like to add one or two months.
Ashley recommends keeping our rainy day funds in a completely separate bank than our checking accounts, like in an online savings account. Unless we’ve set up automatic transfers and the money is out of sight, out of mind, it’s really hard to save.
Building up our rainy day funds should be our number one priority, overpaying down debt. If you’re not sure where to start, check out our free guide, ’Save $1,000 this Month.’
Find Money Buddies
Building up our rainy day funds or staying calm during market dips is easier said than done. We can have the best of intentions but if we’re not reminded, or not held accountable, our motivation can wane and off we go back to old habits.
Build a team of money buddies that can support you in your goals and even just give you space to vent on the rough days. Or join a Slack community!
Take Advantage of Applicable COVID-19 Relief
There are various relief efforts underway to take some of the financial burden off of individuals during this time of crisis. We all get to file and pay our federal taxes later {the new deadline is July 15th} but if you expect to get a return, there’s no need to wait.
Additionally, the CARE Act, a $2 trillion stimulus effort, is the largest emergency aid package in U.S. history. Highlights include a stimulus payment, expanded unemployment benefits, federal student loan relief through September 30th and forgivable loans for small businesses.
As part of the bill, menstrual products are now eligible for reimbursement for health savings accounts and flexible spending accounts.
For those with credit card debt, credit card companies are lowering interest rates and waiving fees. For those with student loans, interest is being waived and there are opportunities to defer payments. For homeowners, there are options for mortgage relief. Read up on and take advantage of whatever relief programs make sense for you.
Stop Watching Your Investments
Especially when the markets are so volatile, you can save yourself the torture by not looking at your investment balances. If you receive notifications, turn them off. The reason we invest for the long-term is so that we can wait out dips in the market. As long as we don’t need the money now, we can wait this out and stay the course.
Ryan Beckwith said it best “Your 401{k} is like your face right now. Don’t touch it.” And better yet, don’t look at it either!
Give Back
The last two steps come in this order for a very important reason. You know the saying — put your oxygen mask on first before helping others. The same goes for our money. It’s really important to give back but we want to make sure it’s not at the expense of our financial well-being.
Whether it’s through our time or money {big or small}, there are many ways to give back and support our communities during this time. Ashley has seen everything from people offering to do grocery runs for the elderly in their communities to donating money to food banks for children who have lost access to daily meals during school closures.
Support Small Businesses
Many of our favorite local small businesses have and will suffer a lot from all of the changes happening. They may be trying to make payroll and support their staff despite all the lost revenue. We can support them by purchasing gift certificates, ordering takeout, buying tickets to future events and sharing the work they do.
Try some of these tips to help ease any financial stresses you’ve been having!