Finance Tips to Follow During This Economic Crisis Caused by Coronavirus
It’s no secret that lots of people are panicking due to the spread of coronavirus. While the panic and fear is blown way out of proportion by the media, the economy is no joke. Small businesses are beginning to struggle, restaurants are offering free delivery to try to stay afloat, people are out of jobs, and the stock market is plummeting. While you can’t control the economy’s effect on you, you can control how you react to it.
Here are some finance tips that everyone should be following now, and things you should think about in the future in case anything like this ever happens again.
Don’t watch the stock market
Watching the stock market is the WORST thing you can do when the market is plummeting. Watching it closely won’t help you in any way. It will only make you more anxious and fearful. It could even cause you to do something really stupid, like sell all of your investments. If you have any stock apps on your phone or follow finance publications, delete the apps and unfollow the accounts. Feeling anxious and seeing this everyday is inevitable if you keep this kind of stuff within reach.
Keep buying or buy more
Us millennials are fortunate that we are nowhere near retirement. The stock market plummeting won’t affect us like it will the older generations. In fact, it is actually an advantage for us. Stocks are the cheapest they’ve been in a long time, meaning we can buy a lot more for the same price. The stock market will only go up in the long-run, leading to larger returns. When I say stocks I don’t mean individual stocks. DO NOT BUY INDIVIDUAL STOCKS. They are way too unpredictable, especially in economical turmoil. Instead, invest your money in a total market index fund like VTSAX. Personally, I’ve increased my 401k contribution to 15% in order to take advantage of the “stock sale”.
Maintain an emergency fund
While this may not be helpful for you now if you are already out of work, it is something to think about for the future. You should ALWAYS have an emergency fund available to you in your savings account during times like these where income is unreliable. Most experts recommend you save 3-6 months worth of living expenses. Having this extra cushion during times of panic will be a huge relief. I recommend starting by saving at least $100 a month or a small portion of each paycheck to a savings account. Set up automatic transfers so you don’t even see the money going out. And no matter what you do, DO NOT SPEND THIS. It is for emergencies only, TRUE emergencies. Not for a spontaneous vacation to the Bahamas with your girls or your dream pair of shoes.
Find a freelance skill
Lots of people are in an unfortunate situation where being quarantined means they cannot work. These kinds of situations express the true importance of having skills you can perform virtually as a way of making money. Learn something new that you are able to charge people for all from the comforts of your home.
I promise, everything will be ok. Be smart about the situation, don’t go to large gatherings, and stay clean! Focus on yourself, don’t panic, and don’t have fear. I plan to use this time to read, spend time with my family, and learn some new things.
If you want to learn more about finance, check out my post Finance Books Every 20-Something Must Read.