The World Health Organization (WHO) declared the Coronavirus or COVID19 to be a pandemic and have asked for countries to learn from each other, act together and help protect all against the common threat. This has naturally led to the stock market plummeting and many being forced to have major financial concerns. Businesses are temporarily shutting down, companies are moving to work from home status and there are a lot of doubts floating around with regards to finances. So how does one make financial decisions when there is so much uncertainty?
There are multiple aspects of your personal financial life that are not in your control. You really can’t control how much paid sick leave your employer provides you, or the amount of medical treatment health insurance plans might cover. Experts estimate uninsured patients may pay in excess of $500 to $1000 just to be tested for COVID19 with costs for the test being astronomical.
However, there are a few smart financial moves you could make during these trying times.
Stay Away From Selling Investments in Fear
Starting with what you shouldn’t do. The news broadcasts talk about the stock market dropping like a rock and threatening to continue spiralling. As of March 13th the stock is more than 20% lower compared to what it was a month ago. Even if you don’t directly own stocks through a brokerage account, this would have significantly caused your retirement account to lose a percentage of its value.
But the key is to never sell.
One thing you must not do is sell stocks or stock-based investments in panic – especially in retirement accounts that you don’t require for multiple years.
As long as your immediate financial requirements are being met, selling stocks post a massive market sell-off is the worst decision to make with regards to your long-term finances. The goal of investments is to buy low and sell high.
Boost Your Emergency Fund
We spoke a few blogs ago about how to get started with Emergency fund investments and how we should all have three to six month’s worth of expenses in a readily accessible place like a savings account. While this is a good goal to have, the reality is most of us will never have that amount of finances. At times like these, an emergency fund is very important. Your piece of mind in knowing you were forced to take an unpaid off work would lead you to be fine financially.
If you do not have an emergency fund, now would be a solid time to begin building one.
You don’t need lakhs of rupees – just a cushion is better than nothing. If you’re among the fortunate people whose income and work have not been disturbed as yet, consider saving aggressively in your emergency account. If you have not allocated your tax refund as yet, bulk up your emergency fund with the funds.
Keep a Bit of Cash on Hand
If COVID19 gets worse, global shutdowns could become a reality. This makes it difficult to obtain cash if bank branches shut shop. Get a reasonable amount of cash and keep it in a safe place in your home.
Finally, finances minus good health goes nowhere. Ensure you and your loved ones take the proper amount of care by practicing Social Distancing, trusting only verified sources of information for updates on the virus and staying healthy with a good intake of essential minerals and food groups. A healthy body requires a healthy mind so ensure you get plenty of sunlight daily, read your favourite books, speak to your loved ones on the phone, exercise at home, and maybe even journal every morning.
Your daily life will get disrupted so say no to social interaction, dates, and get-togethers. Ensure you wash your hands daily and for 20+ seconds each time. Use hand sanitizers. If you must, grocery shop do so at times when there won’t be large crowds at the store. Wipe down any and all deliveries thoroughly. Make sure your children aren’t attending parties or going to the playground as you don’t know who is touching the equipment. Self-quarantine is the call for the hour.
Trust that this too shall pass. Stay safe and remain positive.
