How to Protect Yourself Financially from the Impact of the Coronavirus
It’s official, the US has become the new epicenter of the coronavirus epidemic surpassing both China and Italy. While the government has taken steps to alleviate financial burdens for many US citizens, it’s hard to predict just how much impact the economy will face. Now is the time to plan ahead in case things take a turn for the worse later on.
With sources of misinformation so prevalent online, particularly on social media, it’s imperative to stay on-guard and diligently consider the sources in order to stay safe. Let’s deep dive into how you can protect yourself financially from the impacts of COVID-19.
1. Spend Less and Avoid Major Expenses
The economy faces potential instability as the coronavirus cripples governments around the world. Hospitals are flanked and are running out of personal protective equipment, beds, and ventilators. Most young Americans haven’t seen a recession like this before because it’s been more than a decade since 2008’s financial crisis.
Now is the time to become responsible with your money. Below are a few basic rules to keep in mind:
•Avoid Major Expenses: It is best to postpone making big financial commitments while the pandemic rages on, so be cautious before purchasing things like houses, cars, and other major expenses.
•Spend Less: Micromanage your expenses down to the penny and eliminate any unnecessary spending. There are many apps that help you control your finances and identify where you might be able to cut spending.
•Find New Sources of Income: The freelance market may be your best shot at recouping from layoffs and pay cuts while you self-isolate. Look toward options like Freelancer and Upwork.
In short, stay mindful of where your money goes.
2. Maximize Your Savings
COVID-19 has taken a sizable toll on the stock market, bringing NASDAQ and the NYSE down several points as investors become more risk-averse. Below are a few tips to protect your savings:
- If you’re making monthly contributions to a 401(k) or other retirement plans, stay on track.
- If you have extra money saved up in banks, keep it there for now. No one knows where the economy could be headed, and every saved penny counts.
- If you’ve spent too much money in the stock market and are worried about the crash, you’ve likely not diversified your portfolio. The coronavirus is new, but crashes in the stock market aren’t. You are at a greater risk of losing money if you haven’t divided your portfolio among different classes of assets such as stocks, bonds, and real estate. So, diversify now!
If you have your money saved up in banks, keep in mind that interest rates will be lower to cope if a recession occurs. Governments are known to do this in times of need to keep the economy afloat.
Our advice is to lock in rates with a certificate of deposit. If you’re fast enough, you could still secure a rate of around 2%.
3. Look Out for Scams
Scammers rear their ugly heads when panics ensue, knowing fully that desperate people will be looking for alternate sources of income. With so much misinformation out there, you have to stay on your toes to spot scams and thieves. People will try to take advantage of you and ramp up their efforts to make a quick buck. Here are a few things you should keep in mind:
- At this time, there is no cure for COVID-19. Vaccines are being developed, but they’re far from ready. If someone offers you a cure, they’re lying.
- Scammers are sending emails that claim they are from the Centers for Disease Control and Prevention (CDC). Delete them. And, better yet, don’t look to your inbox for such information. Instead, visit the official website here.
- If you’re feeling charitable, make sure to do your research into a worthy organization. A word of caution: no charity organization will ask you to wire money through gift cards. That’s a sign of a scam.
4. Travel Preparation
Travel is one of the fastest ways to get the coronavirus. Our advice is to avoid traveling unless it’s absolutely necessary. If you’ve already booked a ticket, you may want to cancel now if your airline hasn’t already. In either case, you should be eligible for a full refund. Many airlines are now offering adjustable rebooking policies, but they’re not always consistent.
Their rules and applicable dates also change without giving you any notice. So, if you are planning to travel or want to postpone, make sure to check in with your airline to explore your options.
The same also applies to cruises. You should be able to receive a full refund for ticket cancelations or at least receive flexible rebooking options.
A Brief Word on Travel Insurance
While there are travel insurance packages that let you cancel policies without giving any reason, they’re few and far between. Most policies won’t reimburse you for known travel issues, which include COVID-19. Make sure to check in with your insurance carrier to evaluate your options.
We hope the advice above helps you prepare. The story on the coronavirus is still developing, so make sure to stay tuned and regularly check in with the official websites for CDC and WHO.