Coronavirus and Your Financial Health
Follow these three strategies to help shield your finances from the impact of the COVID-19 pandemic.
As the Coronavirus pandemic persists, so do worries about the economy and personal finances. In fact, more than half of Americans have cut their spending as a result of COVID-19, either because of concerns over the economy or the stock market or both, according to Bankrate.
Despite lingering uncertainty, consumers have a role to play in helping to protect their health as well as their wallets. Whether you’re facing wage loss or grappling with economic uncertainties, following are steps you can take to improve your financial well-being.
Coronavirus financial health tip #1: Let reason, not fear, dictate financial decision-making
Empty store shelves and reported stockpiling of toilet paper, hand sanitizer and other items signal a type of over-buying that is rooted in fear. Not only does panic-buying harm others by creating artificial shortages, it could be harmful to your finances, particularly if purchases are made with a high-interest credit card.
Once you have enough pantry staples and other essentials to get you through a possible quarantine, think twice before allocating additional funds for disaster items, since that money could be used to build savings or pay down debt.
Investments are another area where panic can cause reactionary, irrational responses. Disconcerting as it is to watch markets drop and the value of your retirement nest egg diminish, resist the temptation to sell off your investments — especially in retirement accounts that you won’t need for some time.
Instead, think long-term with your retirement savings. The stock market has regular dips — as we saw during the “Great Recession” — but historically it has gone up over time.
Coronavirus financial health tip #2: Take your family’s financial temperature
Sometimes it takes an emergency like a pandemic to get one’s financial priorities in order. Even if you’re facing a job loss or reduction in wages, it’s not too late to take stock of your finances and make an emergency financial plan.
Start by reviewing your family budget and financial reserves. Assuming you have a source of income, consider setting aside a portion of each paycheck to build your emergency reserves or using part of your tax refund or economic impact payment to jump-start your savings. Financial professionals generally recommend having 3 to 6 months’ worth of living expenses on hand for emergencies.
If you’ve lost a job or seen a loss in wages, get in contact with your creditors and lenders and let them know of your situation. They may be willing to help you defer payments or reduce your payments due to financial hardships.
Coronavirus financial health tip #3: Watch out for scams
Scammers are capitalizing on this global health crisis to take hard-earned money out of the hands of people who need it most.
- Beware of fraudulent websites, phone calls, emails, and text messages.
- Don’t respond to texts and emails about checks from the government. Someone claiming that they can get you the money now is likely a scammer.
- Hang up on robocalls. Scammers use these illegal robocalls to peddle everything from low-priced health insurance to work-at-home schemes.
- Remember, financial institutions won’t ask clients for their personal information or log-in credentials in an email or text message.