How to Deal With Financial Anxiety During the COVID-19 Outbreak
Due to the Coronavirus outbreak, many people are dealing with financial stress and insecurity. Even if you are employed and relatively stable right now, you may be worried about the future. If that’s the case, here are five ways to manage your financial anxiety.
1. Hold off on cashing out your investments
Watching your investments plummet in value can be hard to stomach. According to Brenton Harrison, a financial advisor with Henderson Financial Group, people may struggle to cope with the situation rationally.
“People who are stressed financially have a tendency to act off of emotion rather than research and logic,” he said.
While you may want to cash out your investments, you’d suffer major losses. And, you’d lose out on potential gains in the future.
2. Be conservative with your stimulus check
If you don’t need your stimulus check to pay for essentials like rent, utilities, or groceries right now, Harrison recommended that you be cautious.
“While you might be tempted to pay down debt or invest your stimulus check, I would do the boring thing and put it in a regular old savings account,” he said. “We don’t know how long it will take for us to get back to ‘normal,’ and I’d hate for someone to spend their stimulus check only to find out they need the money if things haven’t turned around as quickly as we’d like.”
Tucking your money into a savings account will ensure you can access the money quickly if you need it in an emergency.
“There’s nothing wrong with saving and making sure you have cash on hand when times get tough,” said Harrison. “And if the money is still there when this is all over, you can always put it to use at that time.”
3. Cut your expenses
If you’re still employed right now, it’s a good idea to start tightening your belt and eliminating unnecessary expenses. It will prepare you if things get worse, but giving yourself more breathing room in your budget can help reduce your anxiety, too.
Review your budget and look for any unused expenses. If there are subscriptions that you are currently unable to use, such as gym memberships or annual passes, canceling them can help free up extra cash. Or, if you’re sheltering in place and not using your car as much, you could qualify for cheaper car insurance and lower your monthly premiums.
4. Boost your savings
If possible, focus on bolstering your emergency fund by reducing your expenses or making extra money from home. If you filed your tax return and are expecting a refund, you can use that windfall to add to your savings to give yourself an additional cushion. If you were able to trim your budget, set up automatic deposits so that your savings go directly into your bank account.
5. Understand your options
Even if you still have a job, you may be worried that your situation could change in the near future.
“The majority of my clients are under the age of 45, many of whom have young families,” said Harrison. “Their biggest stressors are how they’ll manage day-to-day expenses in the event they lose their jobs. Whether it be the cost of daycare, car notes, or even student loan payments, they are at a point in life where expenses are high, and the prospect of losing their income is a daily concern.”
To help you manage your anxiety right now, research your options and keep that information handy in case you need it later on. Knowing what programs and resources are available can reduce your stress. If you need to take advantage of them, you’ll have the information ready so you can access them quickly.
- Student loans: Federal student loan payments are automatically suspended until September 30, 2020. If you have private student loans, some lenders are offering temporary forbearances to borrowers affected by layoffs or income reductions. Check with your lender to see what its policy is.
- Rent and mortgages: Depending on where you live, you may be covered by an eviction or foreclosure ban, meaning a bank can’t foreclose on your home, and you can’t be evicted for nonpayment of rent for a limited period of time. To find out what protections are available in your state, visit the U.S. Department of Housing and Urban Development website.
- Other creditors: Some credit card companies, personal loan lenders, and auto loan lenders are offering alternative payment options and forbearance options to affected borrowers. If you can’t afford your monthly payment, contact your lender right away.