Q: Since the Coronavirus has landed on American shores, each day seems to bring more devastating news about the state of our economy. What financial steps should I be taking to protect my personal finances during this time?
A: The Coronavirus outbreak has already generated severe consequences for the national and global economies — and experts say we’re only seeing the beginning of the pandemic’s financial fallout. The virus ended one of the longest bull markets in history, as the stock market plunged by a full 25 percent in one volatile month. In fact, it saw its worst day since 1987.
More than that, the outbreak has adversely affected businesses in many ways:
- production lines are on hold due to an indefinitely disrupted delivery chain
- the global-wide halt on travel has caused tremendous losses for the tourism and airline industries
- the sports and entertainment industries have taken huge hits
- countless other business lines are negatively impacted by a dearth of supplies, decreased spending, and a shortage of personnel due to quarantines or school closures
With all this uncertainty, it’s easy to fall into a panic and wonder if there are some concrete steps you should be taking to save your personal finances from impending ruin. Here are some practical dos and don’ts and coronavirus financial advice to help San Antonio clients maintain financial stability and peace of mind during this time.
Don’t: Panic by selling all your investments
Both seasoned investors with robust portfolios and those simply worried about their retirement accounts can find it nerve-racking to see their investments drop in value by as much as 10 percent a day. It may seem like a smart idea to sell out just to spare investments from further loss, but financial experts say otherwise.
According to The Motley Fool, most sectors of the economy will recover quickly as soon as the outbreak clears. For example, consumers may not be purchasing shoes or cruise tickets now, but they will likely do so when it is safe to shop and travel again. While the global and national economy may not bounce back for a while, experts are hopeful that individual business sectors will recover quickly.
Do: Trim your spending
The thriving economy the country has enjoyed for a while has prompted gradual lifestyle inflation for many people. As the economy heads toward a probable recession, this can be a good time to get that inflation in check.
Companies do not award work bonuses, raises and promotions as freely during a recession. Some people may even become unemployed as companies are forced to lay off workers in an effort to stay solvent.
Trimming discretionary spending now can be good practice for making it through the month on a smaller income. It’s also a good idea to squirrel away some of that money for a rainy day. United Texas Credit Union can help with San Antonio coronavirus financial advice.
Don’t: Put your money before your health
Financial wellness is important, but physical health should always take priority. If you’re feeling unwell or exhibiting any Coronavirus symptoms — such as fever, coughing and shortness of breath — call in sick. Do the same if you’ve been exposed to someone who has tested positive for COVID-19 in the past 14 days.
Don’t let financial considerations come before your health and the health of those you come into contact with each day.
As part of a package of executive orders to help mitigate the financial fallout of the Coronavirus, President Donald Trump has announced that all employees are entitled to two weeks of fully paid leave if they are unable to work because of the Coronavirus. This includes contracting the actual virus, self-quarantining for fear of having been exposed to the virus, and caring for a family member who has contracted the virus, or for children who are home due to school closures. Be sure to take advantage of this offer by making your health paramount.
Similarly, doctor visits can cost a pretty penny, but when necessary, should always outweigh financial concerns. A co-pay or insurance deductible is a small price to pay for your health.
Do: Consider a refinance
The silver lining of an economic environment like this is falling interest rates. As of March 17, the average interest rate on a 30-year fixed-rate mortgage is 3.3%. This is down from approximately 4.5% a year ago. Refinancing an existing mortgage at this lower rate can potentially save homeowners several hundreds of dollars a month. That extra breathing room can be a boon in case of salary cuts or even a layoff during a recession.
Be sure to work out the numbers carefully before considering this move since a refinance isn’t cost-free. Contact us and we can go over your options with you.
The Coronavirus has already impacted the economy tremendously, and will likely continue to do so for a while. Keep your own finances safe by remaining calm, putting your health first, and taking some of the practical steps mentioned above. United Texas Credit Union can provide coronavirus financial advice for our San Antonio area clients.
Your Turn: What steps have you taken toward protecting your finances during this time? Tell us about it in the comments.
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