How to Prepare Your Wallet for Coronavirus
Point of Interest
Protect your finances during the coronavirus outbreak by holding on to your investments, building an emergency fund and asking for help when you need it.
The stock market has been in turmoil this week, with the fast spread of COVID-19, known as coronavirus, in the United States. And while some office workers can work from home, many more people — from bus drivers and nurses to bartenders and retail workers — have to continue going to work or face a loss in income.
It’s an unpredictable time, and with so much at stake, it’s hard to know who to turn to in this public health crisis. We spoke to H. Jude Boudreaux, CFP, partner and senior financial planner at The Planning Center, to get his perspective on the coronavirus and how you should be managing your money in this period of uncertainty.
Ride out the storm
The U.S. stock market has been turbulent since the World Health Organization declared the coronavirus outbreak a global pandemic on Wednesday. The Dow Jones Industrial Average dropped nearly 10% on Thursday. However, this is not the time to be hasty with your money.
“Panicking and selling has never been the right answer,” Boudreaux says. Historically, U.S. markets have always recovered after recessions, natural disasters and public health crises. Financial experts generally recommend that long-term investments, such as retirement funds, stay in the market to weather the storm.
To Boudreaux, the desire to cash out is “not coming from the rational place in our brain.” Making decisions out of fear could result in major losses, so it’s best not to follow the daily value of your investments too closely.
Keep an emergency fund
“It’s more important than ever to have an emergency fund of some kind,” Boudreaux says. “People need time off for work, somebody they love happens to get sick — it’s important to have cash set aside to deal with those things.”
Experts generally recommend keeping the equivalent of three to six months’ worth of expenses in a savings account, but really any amount will be useful. Not only does it help in the case of a real emergency, it also offers you a sense of security when situations are unpredictable. Conferences, sporting events and festivals are being canceled by the minute, leading to an unexpected shortfall in income for many people. If you already have an emergency fund, this may be the time to draw upon it.
Support local businesses
Business, particularly mom-and-pop shops, are reporting significant losses in revenue due to decreased foot traffic. If the trend continues, it’s possible that many local businesses will shutter forever.
We recommend practicing social distancing whenever you venture out of the house. This means washing your hands, maintaining a distance of six feet from people, and staying home if you’re sick.
However, if you are not self-quarantining (whether by choice or necessity), consider skipping Amazon and paying a visit to your favorite businesses, who need help now more than ever. On Thursday, social media platforms were inundated with photos of empty aisles and hours-long lines at Whole Foods and Trader Joe’s, but you can find many of the same essentials at your local grocers and convenience stores.
Ordering takeout, making purchases online, and buying gift cards are also good ways to support shops while avoiding direct contact.
Look for the helpers
Pandemics are confusing and frightening, especially for those who are most vulnerable to disease or financial loss. But in these situations, there are always people putting aside convenience to help others. Fred Rogers of “Mister Rogers’ Neighborhood” wrote in 1983, “When I was a boy and I would see scary things in the news, my mother would say to me, ‘Look for the helpers. You will always find people who are helping.’”
If you are comfortable financially and in good health, we recommend tapping into local resources to help your community. For example, you can donate money to food pantries, assemble lunches for food-insecure students out of school, and grocery shop for your neighbors who are seniors or have disabilities.
“Little things can go a long way for populations who don’t have the bank accounts to manage a disruption like this,” Boudreaux says.