The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
6 Ways to Manage in Our Economy
The COVID-19 pandemic continues to challenge us — and our finances. From businesses shutting down to growing unemployment rates, a quick return to normalcy doesn’t seem likely. If your financial situation has been impacted, or you’re concerned about the future, check out our guide that includes ways to cope with the current climate of our economy.
1. Avoid a Doom & Gloom Perspective
The COVID-19 outbreak and changing economy is scary — and it’s easy to respond to the news and social media updates with heightened anxiety and panic. But now more than ever, the best way to handle this crisis is by carrying an attitude of optimism throughout. Here’s how to help curb that fear:
- Take a break from the news and noise
- Reflect on previous experiences of economic and personal financial resilience
- Keep staying connected to friends and family
- Stay calm and follow the tips provided in this prep guide
2. Don’t Panic & React Out of Fear
With headlines of a “market meltdown” and “massive economic collapse,” you may be quick to act to protect your money or take advantage of low offers. One knee-jerk reaction could be to cash out your stock investments; however, by doing so, you can incur huge losses as a result of the volatile market. It can also be tempting to borrow money with a home equity loan or to refinance your mortgage. These are mega attractive and advantageous options, especially because of significantly low rates. Just give yourself some time to assess your finances before making a hasty decision.
3. Keep Saving & Practicing Good Financial Habits
If you’re a budgeter, goal setter and smart spender, it’s business as usual. Stay the course! However, one tip for savvy savers is to review your budget and goals and see where you can save more aggressively. Are you more of a frivolous spender? Now is the time to buckle down and hang onto more of your money with small changes like these:
- Enjoy free activities with your family like cooking, karaoke, virtual museum tours, reading along with celebrities and riding rides at Disney World, virtually!
- Look for overlooked money drains.
- Hang onto your tax refund and relief check from the stimulus package.
- Ease up on stockpiling and overspending on food, supplies, etc.
4. Resist Looking at Your Retirement
It can be extremely stressful to peek at your retirement funds and see thousands of dollars lost. The stress could trigger you to halt your retirement payments, and hang onto the funds as security for what may lie ahead. If you’re decades away from your golden years, turning a blind eye doesn’t hurt, as long as you have a good retirement plan that’s on track toward your goals. Dan Keady, chief financial planning strategist at TIAA, tells The Washington Post that this is also a beneficial time to increase contributions through your employer.
5. Delay Major Milestones
A survey by The Ascent, from The Motley Fool, found that 44% of respondents have put significant events on hold like changing jobs, getting married, having a child or going on vacation. Here’s why you may want to pause your big plans:
- Keep following social distancing and other health guidelines to keep everyone safe.
- Conserve cash in an unpredictable economy.
- Plan for the event when the economy, and perhaps your finances, gain more stability.
- Focus on priorities like building your emergency fund.
6. Be Cautious About Credit
- Credit becomes a financial crutch in the event of job and income loss. Now that credit card interest rates have dropped, opening a credit card can feel like a great safety net for covering essential expenses if the worst happens.
- If you’re leaning toward using credit as a backup and potential financial coping mechanism, your best option is to get one with 0% APR. Just try to make the commitment though to have your balance paid off before the promotional period ends as you start to financially recover.
- Keep in mind that the more you tap into credit, the more your score can suffer too. So you may want to reach out to your issuer to ask about relief options or increasing the limit on any existing cards you’re carrying a balance on.
It’s a time of uncertainy, yet also a time for perseverance. If the economy is challenging your financial situation and outlook on the future, keep these tips in mind to help protect your wellbeing and money.