How do we heal our finances post pandemic?
The corona virus is wreaking havoc on so many people’s lives with the loss of loved ones, mental health, income, and human contact by simply going to the local cafe. Millions have been infected around the world and the loss of life is in the hundreds of thousands. It’s not like anything we have seen before and this virus is infecting all areas of our lives including our money.
Predictions suggest dire unemployment levels that will reach the Great Depression of levels of up to 30%. Small businesses like restaurants, cafes, shops and freelancers along with all of their support staff have all been closed for months now. Many companies have laid off or asked employees to take pay cuts. With this unprecedented flow in incomes and business, how can we heal our finances?
Perspective
The very first step to healing is to keep this money crisis and pandemic in perspective. This was out of all of our hands. We didn’t do anything wrong and the crisis came from nature and not a sector, wars or other human creation. We all need to sti back and watch the dumpster fire from a distance without beating ourselves up. And from the flames we will rebuild.
Programs
There are many gov’t programs being offered so be sure to check out all levels of government websites. There are programs for individuals, small businesses and large businesses so be sure to apply for any money that you can. If you do work for a large company, contact them to see if there are increased benefits during the crisis like days off or mental health programs.
Payments
Review all of your payments and if there are any that you can postpone, and it makes sense to do it, do it. Banks are offering deferrals for mortgages, lines of credit, loans and credit cards so apply for them if you need the break. Ask for the fine details so you can see how much interest it’ll cost you to defer.
Look at cars, gym memberships, business parking, baby sitting, etc. and cut anything that you aren’t using. It could save you a ton.
Credit Rating
Keep a close look at your credit rating. There are many free services that provide it or you can get a copy from the big credit bureaus TransUnion, Equifax, and Experion in the U.S. It is important that any financial institution that you decided to defer a payment on, does not submit it as a missed payment. This will damage your history and we all need to keep an eye on it.
If you do need to borrow from credit cards or lines of credit try not to max any cards out and spread it around if possible. It’ll help with your overall score if you are not maxing out any one card over 60% so borrow across your cards if necessary.
Income Replacement
Now is the time to start that small business or expand your role at work. When the world re-opens there are going to be winners and losers. The economy is doing horribly but the stock market is only down the same amount as a yearly correction. Look at what the economy will look like when this crisis passes and if you have any business ideas that you could run from home – go for it. Delivery, Health Care, Online Education, etc. these will all be new and growing sectors that you can tap into. There could be new opportunities moving into a growing area of a corporate position as well.
Retirement Accounts
There could be ways to access some of your retirement accounts in a tax efficient and strategic way. Check with your advisor or online to see if you have access to them in a pinch. The penalties for withdrawing money could be worth it if you are in a horrible situation. Make sure to ask for all costs from your advisor AND accountant.
If you are one of the lucky ones working from home with a full salary, take the savings from gyms, work parking, eating out and bars and increase your monthly contributions to your investments. Buying monthly while stocks are low will help average down your overall price as they grow over the long time. Look at investments that are soaring right now too. The new economy will provide many new winners and losers.
Real Estate
Look at your real estate and take advantage of it in any way you can in this pandemic. If you are looking to buy – start shopping and looking at where prices are going. You could get a crazy deal in the next few months as people downsize or sales fall off.
If you are looking to sell or downsize ask your agent and keep an eye on listing prices in your neighborhood to see if waiting six months makes more sense. If we do have a proper rebound it could generate thousands more for your home.
Health and Wellness
If you have lost your job look at any insurance that you lost with it. See if it is possible to continue with the providers for a short period of time if you replace the premiums or shop for a basic plan somewhere else.
Manage your stress by making a plan for the future. From the ashes rises the phoenix! Downsizing homes or starting a new job or business might bring more happiness than pain after this has passed. If we are going to be working from home and having to social distance more – build a life around those realities that still make you happy.
Retirement
This could be a great time to retire if you are eligible. Sell the extra car, move to the cottage or downsize and live the life you were waiting for. If retirement is a few years off, build a strategy to protect your nest eggs and hit your saving requirements.
The market could be very bumpy for the next few years and you want to make sure you are taking advantage of it when you are young and fortifying yourself from it if you are closer to retirement. Talk to your financial advisor, accountant and real estate agent to make a plan for the future.
Financial Education
This is the time to teach your kids to be financial literate! There will be more financial crisis in the future and kids need to learn how to save, invest, start business and how to be ready for a ciris like this. Look for online learning tools online and get them started. It will pay off in spades in the future.
Universal Income and Living Wage
For everyone else who these points don’t help, we need to do more to lift up the people who will be left behind after this pandemic. The haves and have nots was a problem before and now the have nots have nothings. We need to look at solutions to redistribute wealth by exploring proper living wages, accessible healthcare for everyone and universal income ideas.
We were always worried about robots destroying jobs and what is left of the middle class and here a virus has most likely done that. This is our chance for recreating our finances for everyone like the last great depression did. Like any other virus infection, we should emerge stronger right after it has passed.
Like all viruses there isn’t a magical injection or pill we can take to cure it. There are different remedies depending on the patient. It’s important for all of us to push through the recovery and anchor to the other side of it. It will get better.