People are wearing masks everywhere, you can’t find toilet paper, and nobody wants to hug you. In case you’re wondering, I’m not talking about Halloween. I’m describing the COVID-19 pandemic of 2020. As you may well know, times are difficult for many. A record number of people have lost their jobs, and many don’t know what to do next. Consequently, many people may not be looking at how to manage money during a crisis.
However, I believe that managing your money during a crisis will help you keep your head. There are things you can do to keep you on track and prevent you from being crazy with your money. But you may be asking, “what do I do with my money during a crisis?” Here are some practical tips to help you manage your money well even during a time of chaos.
1. Don’t Freak Out
In all likelihood, you’ve looked at the stock market at some point in the past couple of months. Furthermore, you’ve probably looked at your retirement account or your investments to see how they’re fairing. My guess is they probably didn’t look too good. In other words, you feel like your money is disappearing faster than free donuts at church on Sunday morning.
The market is a living, breathing thing. And your panic is not going to help it recover. Instead, stay the course, stay calm, and stay the heck away from your retirement accounts (unless you’re retired, of course). Repeat this phrase to yourself: “I will not touch my face. I will not touch my 401(k).”
This also means you need to stop your panic buying. Seriously, stop hoarding the toilet paper, hand sanitizer, and Peanut Butter Chex cereal. Spending excessively will do you more harm than good during a pandemic. Plus, you keep other people from buying the things they need during a crisis. Please, stick to buying only the amounts you need and don’t over-extend your budget.
2. Stick to Your Budget
Right now, you may feel the temptation to take the paper you would normally use for your budget and use it as toilet paper. But I would encourage you not to do that. First, it’s way too scratchy. Second, you need your budget.
Making a budget is especially necessary during a crisis. In fact, a budget is crucial to making sure your money knows where to go every month. Otherwise, your money will wander around and do as it pleases like an untrained dog. Now’s the time to train that dog! Make your money behave and tell it what to do!
3. Focus on the Most Important Expenses
There are things you want, then there are things you need. I hate to tell you this, but a crisis is not the best time to impulse buy that Harley low-rider. Now is the time to focus on what Dave Ramsey refers to as your four walls:
- Food: You need to eat. Eating is essential for life, therefore it’s essential to your budget. However, if you’re in crisis mode you need to ditch the Olive Garden and Red Robin. Go to the grocery store and use that room in your house called a kitchen to cook food.
- Shelter: You need a place to live so wild animals don’t come and eat you in the middle of the night. Make sure you do what it takes to keep your home for yourself and your family.
- Transportation: You need to get around so you can get to work and make more money. And no, it doesn’t need to be a Suzuki or Lamborghini. A 1991 Toyota Corolla will do just fine. Or any reliable vehicle, for that matter.
- Utilities: You need to keep your lights on and your water flowing. During the pandemic, many utility companies have stopped shut-offs. But this won’t last. If you haven’t paid your bills, they’ll eventually come out of the woodwork like Don Vito Corleone to demand payment. Save yourself some pain and pay them now if you can.
4. Cut Unnecessary Expenses
So, you’ve lost your job, have trouble paying your bills, and you live on unemployment. Now is not the time to go celebrate at the Bonefish Grill. Instead, go over your budget with a fine-toothed comb and cut out anything unnecessary for life.
Some examples of unnecessary spending include eating out, gym memberships, movies, cable TV, rock concerts, and your Amazon Alexa trivia subscriptions. Now, it’s perfectly fine to have or do those things if you have the money. But in times of crisis you need to sort out your priorities and survive the storm.
5. Stockpile Cash if You’ve Lost Income
This is the only kind of paper I’ll tell you to hoard during a crisis: cash! If there’s a high probability your income will go down, you need to save for it. On the same token, if your income has already gone down, you still need to save whatever you can.
Now, I’m not saying you need to become a hunched-over old miser like Mister Scrooge. On the contrary, stockpiling cash like crazy is only necessary when your income goes down. You may need to temporarily stop important things like retirement contributions and extra debt payments. But only until the storm passes. Once your income goes back up and the sun starts shining again, you can go back to your plan and start pursuing your goals and dreams like crazy!
You Can Manage Your Money During a Crisis
A crisis is no excuse to ignore your finances. In the same vein, a crisis is one of the most important times to pay attention to your money! Seriously, people have paid more attention to Tiger King during the COVID-19 pandemic than they have their bank accounts. If you’re more worried about whether or not Carole Baskin fed her husband to the tigers than your financial situation, you’ve got a problem.
There’s no excuse for this, people. When the storms come, don’t stick your head in the sand. Instead, make a plan. Seize control of the controllable, and you’ll most likely come out okay. COVID-19 isn’t the first crisis, and I guarantee it won’t be the last. Create a budget, stick to a plan, and take control of your money.
There’s Hope in Any Situation
What if you feel stuck and don’t know what to do? What if you don’t know how to manage your money during a crisis? We’ve all been in those situations. Sometimes we need a guide to show us the way out. That’s where financial coaching can help you.
Financial coaching speaks hope into your life when things feel hopeless. A financial coach serves as your guide and your accountability partner as you walk through the financial storms of this life.
Now keep your head on straight and go find financial freedom!