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Managing Your Money With the Impacts of Coronavirus
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Managing Your Money With the Impacts of Coronavirus
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Managing Your Money With the Impacts of Coronavirus

6 Expert Tips for Managing Your Money During Coronavirus

By now, it’s clear: Coronavirus is wreaking havoc on the financial landscape across America.?

Beyond the historic volatility of global markets, major industries including hospitality?and retail, as well as just about every small business in the country,?have been hammered by necessary social and commercial restrictions to curb the virus’ impact.?

RELATED:?Experts Reveal the Money Habits to Break if You Want to Save Thousands

From workers to business owners, millions of Americans are experiencing some sort of hardship related to the pandemic. Closed doors, reduced sales, and a decrease in overall business have contributed to almost 22 million jobs lost since the pandemic landed in the U.S. When the next unemployment numbers are released in May, the unemployment rate is expected to top 15%.?

If you fall into one of these categories, you might be looking at your bank account wondering how to make ends meet. Take a deep breath and read on: we asked a variety of financial experts — from traditional institutions to digital savings apps — about the key things to understand about your finances right now and how to remain in the black amid these uncertain times.


Assess Where You Are Now


Ash Exantus, director of financial education at?BankMobile, says it’s important to first look at your current financial obligations and see what you can cut. Prioritize what’s necessary. You might be surprised at the cost-cutting that can come right off the top.?

Although stressful, this is a great time to develop a budget, building habits to spend less and save more.?

"Make sure you can cover the basics first like utilities, rent or mortgage payments, medicine, and groceries. Then look at areas where you can cut back — even if it's just temporarily,” says Jennifer Barrett, chief education officer at the money investing app?Acorns.

She notes that Americans are already spending a lot less since the outbreak, but once we resume normal activities, that doesn't mean you need to return to previous spending levels.?


Make the Most of Government Help


Federal and state governments have opened up significant resources for people and companies alike, and we won’t go into those in great detail here, but expanded unemployment insurance (UI) can help fill the gap. For the first time, freelance contractors and the self-employed can receive many of the same benefits as traditional employees. The recent CARES Act will kick in another $600 each week until July 31.?

Although there is the federal $1200 that a majority of people will receive — likely not enough to cover the average middle-class American family’s monthly expenses, much less more than three months — the benefits and rules vary widely by state, so it’s important to check with your state’s benefit site for the correct information on what resources are available to you.?


Let Your Bank Can Help During COVID-19


Most of the big banks are offering payment deferral at a minimum for those experiencing hardship right now. Chase has options for many of their products including credit cards and home loans while Wells Fargo is more of a case-by-case basis, but is offering payment extensions once borrowers return to work.?

If you currently have a large loan, such as a mortgage or auto loan, it’s definitely worth contacting your bank to see which options are open to you.?


Don’t Forget to Save Money?


If you’re still earning significant income during this time, putting money away when and where you can has never been more important.?

RELATED:?Best Budget Apps for Managing Your Money

“Revisiting your values and reflecting on what matters to you most can help you re-prioritize your long-term financial goals during this unprecedented time,” says Marcy Keckler, vice president of financial advice strategy at?Ameriprise Financial.

She suggests potentially scaling back on “wish list” items such as a luxury car in order to direct that money towards retirement or other investments.?

Barrett adds that using an app like Acorns can help save any amount? — as little as $5 — taking advantage of lower stock prices, well-positioning investors to take advantage of the eventual economic recovery.

“What you don't want to do — if you can avoid it — is withdraw money from any investment accounts. Doing so when the market is down can lock in losses and prevents your money from having the chance to benefit from a market recovery,” she says.?

In any case, any spare income is a great opportunity to build up general savings. With an estimated?70% of Americans having less than $1,000 in savings at their disposal, creating a viable plan to put money away now means less stress during the next significant economic downturn. Putting aside $20 a week now means that you can hit that $1,000 mark in less than a year. However, it seems worthwhile to mention here that paying off any high interest credit card debt first is more important than saving for the marginal dollar.

As times improve, having from eight months to a year of living expense savings on hand is a good standard to shoot for.?


What Not to Do During COVID-19


In this time of great uncertainty, it’s easy to rely on loans, credit cards, and pre-saved retirement funds to make ends meet in the short-term. However, if at all possible, don’t do it.?

“Dipping into your retirement accounts should be your absolute last resort to pay for current expenses,” Keckler says.

For example, if you withdraw money from your 401(k) or IRA and you’re under age 59?, you will owe a 10% penalty on the distribution and you will have to pay income tax on it. However, the CARES Act waived this penalty temporarily for those facing financial hardship as a result of coronavirus in 2020.?

Keckler notes that you can take out up to $100,000 penalty-free, but you’ll still have to pay taxes on the money, though that liability can be spread out over three years, from 2020 to 2022.

You also don’t want to be subject to the average?16% interest rate on credit cards as that’ll put you deeper into debt later on.


Tips on Investing During COVID-19?


Just like normal economic times, diversification is key.?

It’s important not to have too many investments in one particular area or asset (stocks, bonds, etc.) and spreading your available capital over different countries, industries, and assets means that you’re at lower risk of losing significant value when a downturn hits.?

“(It’s also worth noting) that taking money out of your retirement or other long-term investments during a downturn means you’re selling your investments when the value is down,” Keckler adds. “That money loses its earning potential, further decreasing your total retirement value.”

However, if you have resources available right now, markets are still well off their early-year highs and there is great opportunity to add value to your overall portfolio. It’s worth consulting with a financial advisor to see where you may be able to make the most of your potential investment. If you don’t have or can’t afford a financial advisor, consider investing in low-fee, target date retirement funds like the ones offered by Fidelity or Vanguard.

The above only applies though if you’re in a healthy financial situation to do so. If you have limited to no income, the consensus among our experts is to focus on your current financial obligations while building up emergency savings, if you can.?

Even in these uncertain times, financial health doesn’t have to take a back seat. Integrating even just a couple of these tips into your monthly money management will make you that much better off as the global situation improves.?

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