Financial Hope Amid the Coronavirus COVID-19 Crisis: Yes, Karen, You CAN Do Something
You can help yourself financially during the Coronavirus COVID-19 crisis
6 min read
The COVID-19 crisis unfolds
Many will say that we can only stay at home and watch the COVID-19 crisis unfold, both damaging our health and our finances. It is difficult to turn on the TV, check in on social media, watch online new reports, and even check your mail, without hearing about the absolute devastation we are experiencing worldwide. From quadruple-digit new cases each day to additional industries facing cutbacks, all culminating in a downward spiral of the world’s major economies, it can be beyond difficult to see a light at the end of our current virus-filled tunnel much less find any hope, financial or otherwise.
However, it is important to realize that this really will NOT go on forever, and small steps you take right now will not only help you weather this current storm but boost your long-term financial health. Let’s look at some actions you can take, others you should avoid, and discover how the country’s lenders and financial leaders are making efforts to provide all of us with support—and financial hope—for the future.
Finding Your Financial Hope—What you CAN do:
Find money leaks. Odds are that you have money trickling out in small amounts, which really adds up to more than you think when combined. Reduce subscriptions/memberships—they can be started up again when you are in a better position. Re-evaluate your monthly utilities—do you need the full satellite TV plan, home services like housecleaning and yard care, and full-service phone plans?
Drop your retirement account contributions. Don’t stop contributing altogether but consider reducing your contributions to your employer’s matching level. You can boost them back up again when the economy improves.
Bolster your emergency savings. With most social activities cancelled, you are likely saving a fair amount of money on activities. Set that money aside to ensure you have the recommended 3-6 months savings built up. Re-evaluate the plan for your income tax refund. You may want to reconsider any big-ticket purchases and set aside that money for emergency savings.
Monitor your credit score like a hawk. If you do find that you need a personal loan to get you through a tough time (losing a job, small business closing, unplanned medical expenses), a stellar credit score could be your golden ticket to an attractive loan rate.
Assume you will be laid off. Although some industries are truly going to “take it in the shorts”, others may simply find creative ways to continue doing business. Be part of the solution; find ways to do your job remotely and offer your employer ideas and tools which can help them navigate this time. Heck, you might even earn some brownie points (aka a promotion) when this is over!
Even think about touching your current investments. Uncertainty and risk are truly part of investing and we all know there is an ebb and flow to the system. You don’t want to make a decision based on panic and temporary conditions, no matter how dire they seem.
Don’t Buy Things in Panic (like everyone else). It is good planning to have a supply of frequently used items for a scenario like this. However, it is not good money management to hoard items in fear. Unless you have 6 kids living at home, you likely do not need $150 of toilet paper, or 50 pounds of potatoes. Be reasonable and remember to balance short- and long-term financial goals.
Accessing Home Equity Without Serious Consideration. Before you start thinking about a home equity loan to solve this short term crisis, you need to consider multiple factors, including how it affects your monthly budget, what the money will be used for, and if you have other potential sources of money.
How Banks are Adding to Financial Hope:
Although we are universally feeling the sting (can we call it outright agony) of the current economy, financial institutions are doing their part to help ease the suffering many people are experiencing—or will experience in the near future—due to this pandemic. Here are a few examples of altruistic efforts they are sharing.
Great savings account rates. Several banks and financial institutions are offering really good deposit account rates and low (or no) minimum balance, making it easy and smart to set money aside. For example, CITI has rolled out a 1.6% rate and no minimum balance on a savings account. Additionally, many banks are offering a reduction in overdraft and account maintenance fees, and refunds of charges which may have accrued recently.
Increased credit lines, flexible payment policies for credit card customers. Credit card companies, hit hard by the global event, are working overtime to assist customers. From helping them cancel and reschedule vacation plans to waiving annual fees, they are making valiant efforts to keep their customers. Citibank has offered to increase credit lines for its credit card customer, while Truist (formerly SunTrust and BB&T) has instituted a 5% cash back for purchases made at grocery stores and pharmacies for its customers.
Personal & Small Business Loans given breathing room. US Bank, one of many nationwide lenders, has begun offering reductions in loan fees and reducing APRs for many personal and small business loans. Understanding the dire situation many small businesses are in, Huntington Bank is providing economic disaster loans to some small businesses, an effort likely to be followed by more financial institutions in the coming weeks and months.
Keeping Financial Hope in a Dark Time:
I know it is difficult to keep your head up during this unprecedented time in our world, but now more than ever we can see how the combination of social distancing and community spirit help to lift our nation out of tough times. Our connectedness and charitable nature allow people to share ideas, hope, and tools with each other. Take advantage of the distancing to review your current financial situation and search for new ways to save money, and utilize our online resources to make smart decisions which can not only help in your short term financial challenge, but set you up for success in the long term.
There is hope, if you look both within and outside…just make sure you are looking through a closed window.
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