10 MoneySmartLife Coronavirus Strategies

The coronavirus will impact your money and your life. Here are some smart things you can do now. These strategies will be useful for both the well and ill-prepared. The economic disruption caused by the response to the coronavirus pandemic will pass. Here are the MoneySmartLife things you can do now.

1. Hoard cash. Aggressively save money now. Cash is King during a recession. This is not the time to be making extra payments. You can do that when the economy recovers. Your spending is probably already reduced because of social distancing. Bank the money.
2. Prioritize bill payments. Know which bills get paid first if money runs short. 
3. Ask creditors about payment relief programs now. Don’t wait until your in trouble to find out your options. Look to protect your credit score when entering these programs. Make sure you understand what information will be sent to the credit bureau while you are on the program. Negotiate for “paid as agreed.” 
4. Draw on your emergency fund, especially food. This is the time to use your emergency fund. Its cash can subsidize your income for a while. The food in your emergency fund is as crucial as cash during this time. It will help your cash flow by reducing food expenditures and improve your social distancing by reducing shopping trips.
5.  Don’t panic and cash out your 401(k). The best thing to do is to keep in mind your time horizon. If you were appropriately invested based on your time horizon and risk tolerance, relax. If you are considering a loan from your 401(K), don’t. Such loans usually are not good ideas because of their long term negative opportunity costs. A loan taken during a depressed market magnifies these negative impacts.
6. Seize the opportunities made possible by the downturn. Build your emergency fund, if possible. This prepares you to withstand “stuff happens” and seize the opportunities a recession always provides. The stock market crashed. The Fed pumped liquidity into the markets, and interest rates are low. Good credit can be prudently leverage into opportunities for growth.
7. Support local small businesses. Our fellow citizens need us to act responsibly toward each other. Social distancing, hand washing are positive actions we should take.  It also means making sure we prioritize our spending to the small local companies that are the bedrock of our community during this disruption. Prioritize your spending in such a way that such businesses get a generous portion of your disbursements.
8. Be mindful of online spending. Technology will help us cope with social distancing. Online shopping and home delivery are effective strategies to limit contact. But what can be a boon can also be a bane. Don’t get induced to spend more by the multitude of online retail tricks and traps. Set a spending hard limit for each online trip. 
9. Manage your cashflow. It’s not just how much money comes in and how much money goes out. It’s also when does it come in, and when does it have to go out? That’s called cash flow. If you manage your cash flow properly, you can reduce your stress and survive short term minor financial shocks.
10. Maximize rewards and benefits from increased online spending. Increase your generosity and give to others. You can have meals or food delivered to the elderly and other vulnerable individuals. Many of our older family members are not digitally literate enough to shop confidently online. They can, however, open a box. Get a list from them or send their favorites. It will help their social distancing and reduce their risks.

The coronavirus pandemic economic disruption will pass. When it does aggressively rebuild your emergency fund’s cash and food. There will be another need for them. Be even better prepared the next time.

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