As of mid-March, there are over 6,400 confirmed cases of coronavirus (Covid-19) in the United States. There have been at least 110 deaths.
In a country of over 300 million people, these numbers might seem meager, but you need to look at the virus’ impact in severely affected countries like Italy to understand what it can do. In addition to claiming lives, the virus has brought the global economy to a crash.
At an individual level, the coronavirus pandemic will affect your finances in many ways. This is why it’s important to learn how to conserve funds during this period.
Continue reading to learn how this health and economic crisis will affect your finances and the various ways you can protect your money.
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How the Coronavirus Will Affect Your Finances
If you live and work in a state that hasn’t been heavily affected by the coronavirus, you probably haven’t felt its consequences on your finances. However, if you live in a state like New York, there’s no doubt you’re feeling the squeeze.
The most affected people are part-time and casual workers, independent contractors, and freelancers. In general, those who must show up at work to earn their pay. Employers countrywide, especially those who don’t offer essential products and services, are suspending operations, meaning workers are out of jobs.
With no income coming in, you have no choice but to conserve the funds you have right now.
Small business owners are also feeling the pinch. As self-quarantine and social-distancing become the norm across the country, people aren’t shopping as much as they used to do before the coronavirus became a crisis. If your business doesn’t sell online or is unable to make deliveries right now, you’re not earning any revenues.
Now let’s focus on how to protect your money.
Keep an Eye on Your Essential Expenses
When a crisis that threatens the ability of people to move hits, panic buying becoming the order of the day. It’s understandable that everyone wants to ensure they have enough essentials to keep them going until life returns to normalcy.
However, panic buying can have a big impact on your personal finances if you aren’t well-prepared. Since you’ll buy items in bulk, you’re likely to spend a lot of money.
What if you don’t have adequate funds saved up?
If you’re spending money from your rainy-day fund, the likely result is you will wipe it out or leave it too low. Sure, you will have the essentials well-stocked, but what if you will face a financial emergency? What if a loved one falls ill and you need to pay for their healthcare bill?
Keeping an eye on your expenditure during this period is an effective way to conserve your funds. While it’s important to purchase household essentials, don’t hoard. Hoarding means you’ll buy most items in bulk, thus you’ll end up spending a lot of money.
In a developed nation like the United States, you have no reason to worry about scarcity of essential items for an extended period of time. You can count on the government to restore normalcy soon enough.
Limit Non-Essential Expenses
If your household is anything like that of the average American, you have a couple of non-essential expenses on your tab. You’re probably paying for home internet and at least one television streaming subscription.
During better economic times, these are expenses you consider essential. But when there’s a health crisis threatening to bring the economy to its knees, these services quickly become non-essential.
When your goal is to conserve funds, limit your spending on non-essential services or items. If your landlord offers Wi-Fi, this is the best time to start utilizing it. Yes, it might be crappy compared to the Wi-Fi offered by commercial companies, but you will protect your money.
The same goes for online TV streaming services. If you have multiple subscriptions, canceling them is the right thing to do. Your bank account will thank you. What’s more, you can easily share a streaming account (and costs) with your closest friends or family members.
These aren’t the only non-essential expenses you should avoid or limit. Evaluate your lifestyle and find items or services that you can do without. Don’t hesitate to chop them off your budget, at least until the crisis is over and you’re bringing in money.
Be Cautious About Investing Your Money Right Now
The coronavirus pandemic has sent the stock market to the cleaners. In the last week of February, for instance, a whopping $6 trillion was wiped off the global market.
This is bad news for the investors who had bought the stocks that are currently being sold off, but it’s good news for investors who want to enter the market. You can either join in on the selling party or buy the selloff.
However, if your finances are shaky, this isn’t the time to start speculating on the stock market.
Investing is never a bad thing, but there’s risk involved. If you make the wrong investments, your capital could be wiped off.
As such, one way to conserve your funds during the coronavirus crisis is to stay away from any investment market. Your money is safer in your savings account.
Increase Your Savings
If you’re lucky enough to have an income right now – perhaps you have a full-time job and your employer is paying you – don’t take it for granted. Even though you can afford to stick to your usual spending behavior, it’s savvier to focus on saving even more money.
If you’ve been saving 15 percent of your net income, increase it to about 25 percent. The more money you save, the more money you will be able to conserve.
Conserve Funds During the Coronavirus
At this time and age, no one expected that a virus can cause a global health crisis with huge economic consequences. But here we are and all we want is to survive. While a lot depends on the government’s actions, as an individual you should know how to prepare for the worst.
You need to conserve funds, just in case the crisis goes on for a long time. With this guide, you now know how to keep more money in your pocket.
Good luck and keep reading our blog for more tips on how to manage your money.