The coronavirus pandemic left many people worried and confused. After you have stocked up on basic supplies like groceries and toiletries, it’s time to think more globally. How this instability is going to affect our earnings and savings? What should we do with our finances?
Millions of people all over the world are trying to answer these questions right now. Here is what experts say about what to do with your money during the Covid-19 outbreak.
Tip #1: Reassess Your Investment Strategy
Ok, you are wondering what to do with your money during the Covid-19 outbreak. Let’s start with investing which is different in times of a financial crisis.
First, you reconsider your risk tolerance. Your ideas from sunnier days cannot be applied to the current situation on the market. It’s time to reduce your appetites and avoid taking more risks than any you can realistically handle. No matter what you read in the media, don’t make any big moves.
Another tip would be to diversify your investment portfolio. You may think that you have already done it, but if the total value of your assets goes up and down all the time, there is a lot to work on.
At the same time, don’t overthink it. In uncertain times like these, it’s almost impossible to predict what will happen next week and how the market will react. If you review your portfolio value daily, you stop seeing a bigger picture and start questioning your investment choices. It leads to making mistakes. So, leave it alone for a while.
Tip #2: Increase Your Emergency Fund
If you don’t have an emergency fund for the worst scenario, start making it right now. Your savings for a rainy day should be worth at least 4 months of your regular expenses, better six.
Therefore, reconsider your budget and make some sacrifices. Probably, you have already canceled your travel plans, so put this vacation money aside. If you planned to buy something like a bigger TV or a new car, you know it’s not the best time.
Start with making a complete list of your expenditures, marking the essential, non-essential and completely unnecessary ones. Cancel the subscriptions and memberships you never or rarely use. Try to quit smoking. Stop having your dog groomed every month. When shopping, resist the urge to buy something just because you are bored or curious. Carpool to work, unless you are working remotely. If possible, refinance your mortgage at a lower rate. Sell some collectibles or luxury items.
For more tips on optimizing your budget, see this article.
Tip #3: Help Others
Don’t cancel your donation subscriptions if you have any. If you don’t, maybe it’s time to help those less fortunate to survive the crisis. Use part of the money you saved on non-essentials to support your friends, family, and neighbors. Donate to charities that focus on medical care and the needs of the most vulnerable citizens.
If you are healthy and not under quarantine yet, support your local businesses like stores and coffee-shops. In times of restricted social activity, they are losing money. Unless it’s dangerous, we should help each other to survive.
Even if you are self-quarantining, you can help others by making donations. For instance, you can support the COVID-19 Solidarity Response Fund for WHO which accepts donations via Facebook Fundraiser and other methods.
Keep receipts, If you make donations in cash (it happens) and want tax return.
Beware of Covid-19 Scams
And what NOT to do with your money during the Covid-19 outbreak?
Avoid sending funds to the organizations you have never heard of and the people you don’t know. Any global emergency gives scammers a chance to make some easy money by playing the emotional card. There have already been some reports about phishing schemes related to the Covid-19 outbreak. Normally, they look like a message from a legit health organization.
To know how to spot phishing and other malicious tricks, read our Complete security guide.
Tip #4: Keep Calm
In any critical situation, there is a strong urge to do something with your money — the faster, the better. It looks like it’s time to act, but the experts advise you to keep a cool head and stay away from any disturbing and fearful predictions. From experience, every time the markets reacted negatively to previous emergencies, they returned to normal in three to six months after the shock. In some cases, investors managed to make profits, though there is no guarantee.
It’s very important to support your mental and emotional health now. So, if you have been taking yoga classes to calm your mind, continue them from home. By the way, home workout and yoga apps are growing popular as gym chains close their doors to curb the disease. Follow the instructions of your virtual trainers not to hurt or kill yourself.
Similarly, if you have been visiting some psychotherapy sessions to deal with anxiety, fear, anger or other ruinous emotions, don’t give them up to save money. It’s part of your survival plan. In isolation, practice e-therapy. Unusual times call for unconventional solutions, and your specialist is likely to agree to Skype sessions.
Tip #5: Negotiate
Many people lose their jobs or income these days. It means hard times for those who used to depend on their paycheck for the essentials. If you find yourself in a difficult situation (or just seek to cut expenses), start with a call to your landlord, or bank, or mobile operator. Ask them if they can change your pricing plan, or cancel late payment penalties, or provide a mortgage payment plan with a lower interest rate. Don’t be shy to ask — we are all in the same lifeboat now. The bank representative you are talking to may have similar problems.
The service provider is not flexible? Make sure you pay their bills first to avoid fines.
If you are going to be late with your rent, contact your homeowner in advance and explain the situation. They may shift payment dates or even lower the rent, depending on the current market situation. In case you are a homeowner, try to be flexible if your lender asks for more time.
Well, these were 5 expert tips on what to do with your money during the Covid-19 outbreak. Follow them to improve your financial situation.
And don’t forget about handwashing!