Managing Your Money During The Coronavirus Pandemic

Financial Wellness By Noah - May 11, 2020

Managing your finances in the midst of a pandemic is no easy task. We can help you get answers to some pressing financial questions, so you can make a smoother plan and get back to focusing on what matters most.

How Did the Pandemic Affect the Economy in 2020?

Nearly 17 million people filed for unemployment in a 3-week span. Headlines warn of an impending “global depression,” slicing the world’s GDP in half. The question on many people’s minds is, “Are we heading into another historic stock market crash and depression?”

The trouble of making a firm prediction for what will happen to the economy post-pandemic is that we are still so much in the midst of it. Expert predictions based on a 2-week quarantine don’t make much sense for a 6-8-week quarantine, and it’s still difficult to say how long shelter-in-place orders will last. There’s a lot even the experts simply don’t know.

What happens to the economy depends a lot on what course the pandemic takes (e.g., how long we’re seeing large-scale surges of infection) and how countries respond. Passing measures to protect workers and small businesses from economic collapse can help mitigate losses. Passing insufficient economic relief, or relaxing quarantine measures too early and facing another wave of illness, could worsen economic effects.

One piece of good news to keep in mind is that if you won’t be drawing from a 401(k) or stock market investments for years to come, a slump now isn’t necessarily cause for alarm. The market recovered in about 4 years after recent crashes like the Great Recession. Even if your statements look worrying now, if you have the ability to wait, you may be able to follow the market to better days ahead.

The best thing most of us can do right now is focus on our own financial stability, so we’re as prepared as possible for whichever economic outcome comes to pass.

How Do I Get Emergency Financial Help During a Pandemic?

The first step to shoring up your family’s finances is checking your emergency fund. Ideally, you’d already have a fully-funded account ready for a rainy day (or even a pandemic). But if you don’t, you still have options. Here’s how to access them.

How do I get emergency money?

These resources can help you get cash you need to make ends meet:

  • Unemployment benefits: Apply through the state where you worked. You may be eligible for unemployment even if you weren’t formally laid off, such as if you left work to quarantine yourself or care for a family member. Self-employed and contract workers may also be eligible.  Learn more about filing for unemployment here.
  • The CARES Act: Part of the economic relief package included a $1,200 “recovery rebate” for most individual taxpayers, $2,400 for most joint tax filers, and $500 for each child.
  • Dislocated Worker Grants: Funds go toward certain employment and training activities, or making temporary jobs available in areas hit by a disaster. Freelancers may also be eligible for a dislocated worker grant.
  • File taxes: The deadline for filing income tax is extended to July 15, 2020. It’s still worth filing earlier, if you haven’t already. Most Americans expect to receive a tax refund, and that money might come in especially handy in 2020.
  • Small business funding: The CARES Act and offer paycheck protection, loans, or grants that may help small business owners keep their business afloat during this difficult time.
  • Industry-specific relief funds: Some companies and organizations are sponsoring relief funds for industries and workers affected by coronavirus. Examples include Google’s Journalism Emergency Relief Fund, the Bartender Emergency Assistance Program, One Fair Wage for tipped service workers, and HALO grants for library workers.

How do I start an emergency fund with no money?

Most of the emergency relief funds available, helpful as they may be, won’t cover all of your usual household expenses. Families may have to dip into savings to close the gap. So what happens if your savings account is low?

A reasonable emergency fund should hold about 3-6 months’ worth of living expenses, ideally. In reality, this isn’t the case for many Americans. The median savings account balance, for households with a savings account, is $4,960.

If you’re still working, now is the time to write a new household budget to reflect changes (e.g., more meals at home, fewer tanks of gas) and save where possible. Here are a few ideas to help you start saving. Some of them work even if you’re not bringing in any income at all right now:

  • Research and apply for any relief or grant funding you’re eligible for
  • Put money you’d usually spend on gas, restaurants, gym membership, and similar expenses into savings
  • Save money on groceries by meal planning to limit waste and shopping at discount supermarket chains
  • Reach out to lenders and discuss suspending payments for a few months. (Have an agreement with Noah? Talk to us if you’re struggling. We’d love to discuss anything we can do to make life easier.)
  • If you have rewards points available on a credit card account, redeem for cash or grocery gift cards, and put that money into savings
  • Buy only what you need. You can borrow a cup of sugar (or a roll or two of toilet paper) from a neighbor. Borrowing cash for an unexpected co-pay might be tougher.

The most important thing to remember is that we’re all in this together.  None of us have experienced anything like the coronavirus pandemic in our lifetimes, which means we’re all learning how to adjust and cope.  Be kind to yourself, and if there’s any way the Noah team might be able to help during this time, please don’t hesitate to get in touch.