How Do You Manage Money During Coronavirus?

The $1.2K check from Uncle Sam probably isn’t enough, but there are some steps you can take to gain control over your finances.

Getty Images

The coronavirus pandemic has totally upended normal life, and it’s probably coming for your wallet. People are losing their jobs in mass numbers, college seniors are suddenly looking at few to zero early career prospects, and the government is going to pay some people $1,200 in an effort, albeit small, to cushion the blow.
At this stage, even the most seasoned economic analyst can’t predict what exactly the aftermath of the pandemic will be. For everyday people who might be aiming to do more with less, there are some steps you can take or at least explore to avoid long-term financial damage, and – let’s face it— just get by.

RELATED: Who Qualifies For Congress’ $1,200 Stimulus Checks?

Sure, conventional wisdom recommends keeping an emergency fund with 3 to 6 months’ worth of expenses, but most Americans don’t have one — because they’re living paycheck to paycheck. If you lose your job or see a drop in income, what do you do about rent? Your student loan debt? All your other bills?

Despite the stressful uncertainty, there are some ways you can take control of your finances. Companies, landlords, and the government have introduced relief measures that might apply to you. Below are some answers to common questions based on conversations with financial experts on how to manage your money during the coronavirus outbreak.

RELATED: Congress Passes Historic $2 Trillion Coronavirus Relief Package

How much am I actually spending?

You’ve probably developed feelings about budgeting. But if you wind up in a situation where you need to suddenly cut costs, you should know how much you’re regularly spending. Given you’ve probably been ordered to stay at home — and tons of scheduled events have been canceled — your spending habits have also likely changed. “This is a really good time for anybody, no matter what their age is, to take stock of what they currently have and how they spend,” Carrie Schwab-Pomerantz, certified financial planner and president of the Charles Schwab Foundation, told NowThis. 

To get organized, you can start by creating a “net worth statement” — or basically adding up the costs of essentials (such as food, housing, utilities, and health care) and non-essentials while factoring in any existing debt and savings. You might also take a close look at how you can cut down discretionary spending, whether it’s a subscription, membership, or other recurring cost. 

“Everyone at this point has to make some sacrifices. If you look at what medical professionals have to deal with every day — and people who are delivering and people at the grocery stores, they’re dealing with their lives and their health,” Pari Hashemi Magura, a financial adviser at Wells Fargo in Philadelphia, told NowThis. “If you need to make a sacrifice to cut out your television bill for a few months, that might not be the end of the world.” If you’re completely new to the process, people love apps like Mint or Digit, which can help more easily categorize your transactions. You can also check your most recent credit statement for a log of your transactions, and draw some takeaways there.

I have absolutely no savings. Am I screwed?

While advisors will recommend that you have some cash on hand to stave off any unexpected hardship, you may very well not. Even in extraordinary circumstances, you can look to cut areas  of your budget or develop a habit of saving some portion of any income you still have. Automating those deposits to a separate bank or savings account (consider one with a high-yield interest rate) can also help.  “Even if it’s $20 a month, gradually building that up will help you over time,” Hashemi Magura said. “Especially now that you’re not spending as much, you’re not going out to eat, you’re not traveling.”

Should I pay my rent? 

If you have the money to pay your rent, advisors have recommended that you do it. If you don’t, some states have ordered that landlords can’t evict tenants who miss rent for a certain period of time; in New York, such a moratorium applies for at least April and May. If you feel uncertain about making rent in any given month, especially if it’s related to job loss, you should absolutely reach out to your landlord directly. Landlords and utility companies have helped tenants defer payments for the short-term (which doesn’t mean that you won’t have to make up those balances eventually). 

“Right now organizations that you owe money to understand this current situation and are open to helping individuals navigate payments through this time,” Schwab-Pomerantz said. “It doesn’t behoove a landlord to kick people out right now. It’s not in their best interest.” But still, you should be mindful that not all landlords can afford to go without a rent payment at this time. If you come upon extra money through either unemployment or the government stimulus, Hashemi Magura recommends that you explore how to “divvy up that payment” across May and June for essential costs, including rent. If you’re facing a serious loss of income, advisors recommend you could also consider alternative housing options, whether it’s moving in with family members or seeking out additional roommates — but be sure that’s safe first. 

Some entrepreneurs have also been looking for new ways to alleviate the burden of monthly rent. Ankur Jain, co-founder and chairman of Rhino, said he has been working with federal, state, and local elected leaders to activate one solution: cover monthly rent with a security deposit that a landlord already has on hand. “Rent is the single biggest expense that most of us have every month,” Jain said. “If we don’t do something about it, almost every young person is going to fall into thousands of dollars in debt or potentially default on their lease.”

How do I address my credit card debt? Should I keep using it?

While advisors generally stress that you pay at least your minimum credit card payment to protect your credit score, that might be unrealistic during a crisis. Being proactive is your best protection. You should reach out to relevant creditors like your credit card company to flag that you’re worried about making your next bill, and see if you can come to a payment plan or get fees waived or interest lowered (and ensure that plan is in writing). 

“Don't hide from creditors,” Schwab-Pomerantz. “Don’t wait until you think you’re headed for trouble. Be proactive and reach out to them because they can't help you if they don’t know.” If you can avoid using your credit card when you’re already in debt to pay for basic expenses, you should. “Don’t live off of a credit card. You’re paying such a high interest rate,” Schwab-Pomerantz said. “It’ll put you more in a hole.”

If you can’t come to a healthy place of paying minimum or no monthly payments on your credit card for the short-term, you might also consider looking into a card that offers a 0% interest rate for at least a year. Federal regulators have pressured banks to be more lenient, and many banks are offering some waived penalties and fees on a case-by-case basis.  

What about my student loans? 

Under the massive government stimulus package that was passed in March, federal student loan payments have been deferred through at least September 30. 

This is automatic, and it doesn’t require any action from you. In addition, the interest rate on your federal student loans has been set to 0% through September 30. The relief does not, however, affect private student loans. As with other creditors, reach out to them if you have private student loans and are worried about hitting your payments. The stimulus package has other provisions related to student loan debt, including a temporary halt of garnishment of wages, Social Security, and tax refunds from anyone who’s defaulted on their federal loans.

Should I even think about investing?

You may have read reports that global markets have hit historic lows, but that doesn’t mean you should touch any existing investments like a 401(k). Experts will point to investors who continued to hold their assets through historically rough periods seeing a payoff down the line. “What [young people] have is the gift of time for their money to grow and to weather these different storms,” Schwab-Pomerantz said.

“Panic is not a strategy. Investing is a long-term endeavor, and it's super important to be well-diversified,” which means that your portfolio should not consist of a single type of asset, whether it’s a share in a company or an exchange-traded fund (ETF). If you’re in a position to invest money right now — which means that you can cover your basic expenses and still save — you could buy into some long-term investments at a discount. As long as you don’t need the money within the next five to seven years, you have a much lower risk of being forced to sell your investments at a loss.

If I have any extra money, what can I do to help?

People around the world have been struggling in an endless number of ways because of this pandemic. If you have cash to spare, you can seek out ways to contribute to nonprofits like Feeding America and Meals on Wheels and mutual aid organizations in your country or city. You can also support local businesses, including restaurants, bars, book stores, workout studios, and boutiques, by spending money on their products or take-out, as well as workers in the service industry, including hairstylists, nail stylists, and house cleaners, by paying them for services. Even if you can’t contribute money, there are opportunities to volunteer your time online.