Personal Finance

6 Strategies for Coping During the Coronavirus Crisis

April 6, 2020
The coronavirus pandemic has affected the financial markets as well as people’s daily finances.

Key Points

  • Control the negativity. Find sources you can trust to stay informed.
  • Take stock of your financial goals. Remember why you are saving for the future.
  • Reevaluate your budget and spending. Tap in to cash whenever possible so you aren’t locking in investment losses.
  • Control how much you save. Automatic contributions take emotions out of saving, but if you need to pause saving, be sure to resume it in the future.
  • Evaluate your investments. Determine whether your asset allocation is appropriate for your time horizon.

The coronavirus pandemic has drastically affected our daily lives and had an impact on our savings. There’s nothing like an erratic stock market to wreak havoc on our emotions and long-term perspective about saving.

We wonder if we stayed in the market too long. We question if we are invested properly. We agonize over what the market will do next. We agonize over what we should do next.

If you feel like you should be doing something, here are six things you can do to help you cope in this uncertain time:

1. Control the negativity.

A colleague of mine often reminds me that, “feelings are facts.” Step away from the news, the internet headlines, and anything that is unnecessarily alarming, but do find the sources you can trust to stay informed. Beyond financial uncertainty, the pandemic also has us concerned about our health. We are encouraged to keep a physical distance from people—even our loved ones. Maintain your connection through technology, step outside for fresh air, and keep a routine. These can all contribute to your overall well-being.

2. Take stock of your financial goals.

Take a step back and remember why you made plans to save for the future. If you were saving for the long term—whether that is retirement or setting aside money for your child’s college education—you weren’t planning to access that money for several years. That should still be your plan today, tomorrow, and next week.

3. Reevaluate your budget and spending.

This might be a good time to finally put together or revisit your budget and see where your money really goes every month. This is especially important if you are on a fixed income and relying on distributions from your investments. Try to tap in to cash first whenever possible so you’re not locking in investment losses.

Controlling spending is one way to manage through market downturns. You may already find that you’re spending less discretionary income on things like travel, entertainment, and eating out. And, for those who are working remotely as a result of the pandemic, you’re saving money you would have spent on commuting expenses.

4. Control how much you save.

As a financial planner, I laud automatic investing and saving solutions. If you consistently contribute to your investments—whether it’s via your employer plan at work, or you are regularly contributing to an IRA or other account—you are investing when the markets are high or low. Over time, this can average out. When markets are down, it is a chance for you to “get a deal” on saving for your retirement. When you are continuously investing, you don’t have to worry about timing the market and getting in or out before the next good or bad thing happens. That’s one less thing you have to think about.

If you can, keep contributing to your accounts. If you can’t, that’s OK. Give yourself some flexibility to change your savings approach as your situation dictates, but make sure to revisit when circumstances settle. You may want to have more cash on hand for emergencies.

5. Evaluate your investments.

Sometimes it takes a market downturn to get the attention of investors to examine if their asset allocation is appropriate. And when markets have performed well, it’s easy to forget to check that on a regular basis.

If you are going to look at your portfolio, focus less on the balance and more on what type of investments you have. Hopefully you have a diversified portfolio, meaning you have a mix of equity and fixed income investments that will help you achieve your long-term goals. But if you don’t, use the opportunity to revisit your current situation and consider rebalancing. If you’re more comfortable waiting until this volatility subsides, that’s fine too, but make a reminder to revisit your asset allocation to make sure it aligns with your time horizon.

6. Remember that the best things in life are free.

My grandma used to tell me, “It doesn’t cost anything to be kind.” Kindness, generosity, and empathy may be in short supply as many people are stressed. Please take the time to acknowledge and thank those who are trying to keep stores stocked, businesses operating, and people healthy and safe. Call or text a friend. Be a good neighbor. We’re all in this together, and we will get through it together.

This material has been prepared by T. Rowe Price for general and educational purposes only. This material does not provide fiduciary recommendations concerning investments, nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price, its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.

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