My finances are not prepared for the coronavirus. When the virus first appeared in the last quarter of 2019, I did not pay much attention to it. But as more and more stories appeared about the virus in China, and then its track to the rest of the world, I paid attention. I was concerned about the number of deaths, the amount of people that got sick. And now I am concerned about the coronavirus and personal finance.
At the macro level, the virus has effectively crippled industries from travel to manufacturing to pharmaceuticals. The stock markets reveal all risks and uncertainties via large drops in stock prices and values. Governments are faced with making decisions about how to lessen the blow to their economies. People are faced with the possibilities of losing jobs, which creates a nightmare situation for those who do not have emergency funds.
Coronavirus and Personal Finance
Unfortunately, my emergency fund is lean. I’m trying to pay down debt and save at the same time. I am not following the debt snowball method to the cent, because I need to save now. My savings are not where I would like them to be and I feel that I should have my savings at a certain level. At the beginning of the year, I made a decision to change the account that I use for my emergency fund. This equated to me starting a new fund which meant that I would have to embark on an active exercise to add money to the account. As a result of this change, I have exactly $950 in my emergency fund.
My fears about the coronavirus and personal finance are far reaching and widespread. I have so many questions and very few answers and solutions. My biggest concern is if I lose my job, how can I survive on $950? Then I have other questions that will impact me and billions of other people around the world. What is the stance of the social security office if people are placed in quarantine? Are the health insurance companies willing to cover all costs associated with treatment of the disease? How prepared are the country’s systems if shutdowns are required? How will businesses that rely on people survive? What back up plans are in place to deal with a prolonged crisis period?
The hard truth is that the coronavirus could have a devastating impact on personal finance. The loss of wages and salaries can and will trickle down to everybody, even those who do not lose their jobs. An article on CNBC mentioned that being out of work for 14 days is a financial hit that many people cannot deal with. And on top of that, those that are diagnosed with the virus, but do not have medical insurance, could be looking at thousands of dollars in out of pocket costs for medical care.
How to Prepare for the Next Big Health Crisis
I think that it’s time that I funnel some cash to my emergency fund because I fully understand that it’s never too early to start preparing. We’re living in a time when anything can happen without warning. Here are some personal finance tips that you can use to get you through the current coronavirus crisis and prepare you for the next big health crisis.
1. Increase Your Savings
According to Debt.com, you should have at least six months of savings to live on just in case you lose your income. Although it’s great to stock-up on food, bottled water and disinfecting wipes, you should not ignore your savings account.
2. Get Your Debt in Order
The Wire Cutter encourages you to take advantage of lower interest rates to get rid of your debt. This can be done through refinancing your mortgage, using federal student loan protections and transferring to credit cards that have lower interest rates.
3. Stick With Your Financial Plan
David Rae, a personal finance contributor with Forbes, says that events like the coronavirus are inevitable. But yet, they are temporary. You should stay focused on your time frames and financial goals, especially when it comes to retirement. If you have a financial plan, stick with it. If you don’t have a plan, create one.
4. Be on the Alert for Scams
Unfortunately, there is increased fraud during major outbreaks and disasters. Coronavirus scams which are primarily financial, are on the increase and scammers are using all avenues to attack. Be vigilant about protecting your finances and do not share your personal, financial or any other sensitive informative with anyone. Beware of requests via social media, email and telephone that ask for money, prompt you to make decisions quickly and those which ask you not to tell anyone.
5. Build an Emergency Fund
Michelle Singletary, a columnist for the Washington Post made a poignant statement in a recent interview. In a reply to a question about the idea of a potential recession. She said “You know, this is going to sound crazy, but I operate my financial life like every day is a recession. And I know that sounds extreme. But recessions come, and they go. The economy ebbs and flows. And so you – the one thing that you can keep constant is to build an emergency fund, keep your debt slow.”
- 7 Personal Finance Tips to Prepare for the Coronavirus Economic Fallout (Debt.com via MSN)
- What Coronavirus Fears Could Mean For Personal Finance (NPR)
- Wharton Business School is Using the Coronavirus Pandemic as a Learning Opportunity (CNBC)
- Debt and Coronavirus: Advice and Guidance (Step Change)
- Coronavirus And Your Retirement Plan—Should You Do Something? (Forbes)
- Tips To Avoid Coronavirus Financial Scams (Levittown Now)
- Concerned About Coronavirus? How to Prepare Your House, Mind and Bank Account (Nerd Wallet)
- Financial Peace of Mind in the Age of Coronavirus (The Motley Fool)
- What to Do if the Coronavirus Outbreak Is Affecting Your Finances (Two Cents – Life Hacker)
- 11 Tips to Protect Your Personal Finances from Coronavirus (Much More With Less)
- Financial Considerations for the Coronavirus and Other Emergencies (Commerce Bank)