Written by Brent Lacey on April 26, 2020. Posted in Personal Finance.

23 strategies for financial success during the coronavirus (COVID-19) crisis

coronavirus (COVID-19) financial success

The coronavirus (COVID-19) crisis has thrown the world into chaos. If you’re like most people, you’re probably feeling stressed, scared, angry, and insecure. Think about everything that has happened in the last few weeks:

Hundreds of thousands of coronavirus (COVID-19) cases have been reported
Tens of thousands of people have died
Tens of millions of people are unemployed.
Businesses are shut down and many will never reopen.
Trillions of dollars in world economic value are suddenly gone.

So, what in the world are we supposed to do? How do we weather this storm? The truth is, there is no one right answer. Still, there are a lot of things you can do to make sure you’re keeping your family protected and financially secure.

14 things you SHOULD do

1. Make a budget and stick to it

Ok, yes, I said the dreaded “B-word.” I’ll tell you though, I’ve coached hundreds of families to succeed in their personal finances. I’ve observed that the ones who are most likely to succeed are the ones who are best at sticking to a written budget.

Maybe you think you don’t need a budget. If so, I’d ask why over 90% of millionares surveyed report that a budget was critical to their success. The overwhelming majority of millionaires keep a written spending plan and stick to it. That’s one of the strategies that led to them being millionaires. We should follow that lead.

When you have less money and more uncertain/unstable income, a budget keeps you from derailing your financial plan. Don’t let the coronavirus (COVID-19) crisis wreck your finances! A budget will help you stay on track!

2. Communicate openly with your spouse

When we’re scared or stressed, we often tend to withdraw inward and avoid talking about our fears. Don’t make this mistake! Your spouse needs you to be open about your fears and to share the burden of running your household. Help each other. Be honest and open with each other about money concerns.

I’ve seen many families torn apart over financial issues. That kind of strife typically starts in or is exacerbated by some kind of crisis. Some families even experience “financial infidelity” where one spouse addresses their financial plans by taking out a big loan and not telling their partner.

Lay everything out on the table. Have weekly (or more frequent) budget discussions. If there’s a major change that needs to happen or if the budget isn’t working, don’t hide from each other! This is the time to lean on each other for support.

3. Cut expenses

This is a great time to look at the excess spending in your life and cut it out. If you download my guide “37 ways to save money and weather the coronavirus storm,” you’ll find several dozen strategies that will help you cut expenses or save a little on common purchases. These small changes really add up over time.

First, look at all of your subscriptions like streaming services, home delivery (food, etc), monthly book/clothing/magazine/food subscriptions and consider whether you can eliminate or at least temporarily suspend those. If you’ve already paid an annual fee, you might be able to get a refund (prorated) if you need the extra cash.

You might be surprised by how much you’re spending on monthly subscriptions. At $5-20/month, those add up fast.

You should also look at other budget categories like Amazon spending and eating out. You probably need to cut those by 50% or more if you’re facing unemployment or a major income cut. This is the time to adopt a spartan lifestyle. It’s not a permanent thing, but it may prevent a more serious financial crisis.

4. Stay connected with friends and family

These are the times when we need human connection the most. No, your Facebook/Instagram communities aren’t sufficient. You need to be in close contact with family and friends. Despair, depression, and suicides are all on the rise in the wake of the coronavirus (COVID-19) quarantine.

FaceTime is free between Apple devices. WhatsApp is also free (telephone and video chats) over WiFi. Talk to a friend or family member at least once a day. Reach out and find someone to encourage. Write a thank you note to someone. Call your grandmother!

5. Take advantage of coronavirus (COVID-19) quarantine discounts and freebies

When I first joined the military, I felt guilty taking advantage of military discounts that were offered at restaurants and retailers. I’ve learned to accept them, though, because it’s a way business owners want to support our nation’s veterans.

Many companies across the nation are offering healthcare workers amazing discounts during the coronavirus (COVID-19) lockdown. Check out this post for several dozen major brands that are offering discounts and freebies for healthcare workers.

If you want your budget to stretch further, this could really help you.

6. Make sure you have proper insurance coverage in case you get coronavirus (COVID-19)

If you haven’t already downloaded my free insurance coverage checklist, make sure you do that (see below). While I hope and pray for your continued health and wellness, you never know what could happen.

Make sure that at least your term life insurance, health insurance, and disability insurance policies are up to date and adequate. If your family is counting on your income, make sure your coverage can replace your income in the event you get the coronavirus (COVID-19) infection.

7. Find some work

This is a great time to work on your side hustles, or start one! It doesn’t even have to be clinical work. Lots of people are scared to even go outside their home (despite evidence against this plan). Go mow some lawns if you have to. Do anything you need to do to feed your family.

Have you considered any of these side hustles?

Medical expert work
Online clinical surveys
Chart review
Blogging
Starting an online business
Locum tenens

You may have to get creative, but there is a wealth of information on the internet about side hustles. Go find some work where you can.

8. Sell stuff (other than stocks)

You may not be able to get people to come to a garage sale, but what about putting some stuff on Craigslist or eBay? This could be a great time to clean out all of your old stuff that you’ve been “meaning to get to.” Lots of people are looking for good second-hand furniture, clothing, and sundries these days.

This might be a good time to look into selling that leased car that has a $500/month payment. If that’s your situation, it’s like flying a kite strapped to a boat anchor. You’ll have a hard time getting that plan off the ground.

9. Prepare for investing

Stocks are on sale right now. No, I’m not saying you should try to time the market. However, stock prices are down 30% from where they were earlier this year, and they’re likely to go back up at some point.

The Scope of Practice Podcast, launching May 18, 2020

If you can afford to make any investments now, you’re getting them on sale. This could be a great time to “buy low.” Don’t do this unless you’re sure you have stable income or a solid financial plan that doesn’t rely on the money you plan to invest.

10. Make sure your will is up to date

If you don’t have a will yet, go get one! Trust and Will is offering a free will to healthcare workers during the coronavirus (COVID-19) crisis. You would have to pay for a living trust, but you should at least get the will.

Not to be morbid, but let’s be honest: there have been a lot of deaths in the past month. Don’t think you’re immune. Get a will!

11. Take advantage of 0% interest student loan payments and student loan suspension

From March through the end of September, 2020, federal loans will have a 0% interest rate. If you’re not going for Public Service Loan Forgiveness, this is excellent because the full balance of your payment goes to the principal. Assuming you can afford to continue making the same monthly payment, this is a great way to pay down your principal faster, saving you interest in the long run.

If you’re going for Public Service Loan Forgiveness, payments are suspended. Don’t miss out on this great opportunity. Make sure you’ve updated your annual certifications to ensure your employer is qualified. Even though you’re not paying your monthly payment, you still get credit for making monthly payments as long as you were in good standing prior to March 13.

12. Follow the advice of a trusted financial advisor

Note the use of the word “trusted.” A good financial advisor will talk you out of doing something stupid with your money. Make sure you listen to them. If you have a bad advisor, now is the time to find someone new. You want someone that will teach you, help you not panic, and make good choices that YOU understand.

Read this post on establishing a “personal board of directors” for more ideas on finding the right advisors.

13. Utilize your emergency fund if you have to

The key phrase here is “if you have to.” The emergency fund is meant for exactly this kind of time. The coronavirus (COVID-19) crisis definitely qualifies as an emergency. However, if you can cut your expenses and maintain adequate income, you may not have to touch the emergency fund. That’s a superior strategy. You’d much rather keep that emergency fund cushion as long as you can.

14. Get the recovery rebate

Congress passed a stimulus bill to give a $1,200 rebate to taxpayers. Single filers get $1,200 and you get $2,400 if you are married filing jointly. You’ll also receive $500 per qualifying child.

Eligibility starts to phase out at adjusted gross incomes (AGI) >$150,000. Here’s a good calculator if you want to see what your expected rebate should be: CARES Act Rebate Calculator. This is all based on 2018 tax filings, or 2019 taxes if you’ve already filed them.

9 things you should NOT do

1. Panic during a crisis (even coronavirus (COVID-19))

I know I always make the worst decisions when I’m scared or just not knowledgeable. It’s understandable to be scared in times like these. Actually, if you’re not at least a little nervous about something right now, you’re probably not taking the situation seriously enough.

Panic never leads to sound judgement. You’ll have more confidence if you’re more knowledgeable. Take stock of your current situation dispassionately. Determine your income level (if it has changed), then make sure you’re taking care of food, shelter, and basic transportation and utilities first. If there’s anything left over, then you have some money to allocate to other priorities.

2. Give up on a plan that was previously working

During a crisis, people often want to abandon the financial strategy they were previously using. That is usually the wrong move. It’s reasonable to reassess your situation and make adjustments, but don’t suddenly make some radical shift.

For example, if your income has been cut in half, you may need to stop paying extra payments (above the minimum payments) on your loans or reduce your investing temporarily. But, don’t suddenly go and invest in cryptocurrency or some market sector you’ve never invested in before.

Smart, disciplined investors can ride the waves that the market comes with. Think about it like riding a roller coaster. There are highs and lows throughout the ride, and it can seem scary at times. The only people who get hurt on the ride are the ones that randomly jump off in the middle.

3. Sell stocks

If your mutual funds have dropped tremendously in value, you only lock in that loss if you sell now. If you have many years left before you need to draw from those accounts, I recommend staying the course.

Two exceptions to this:

Tax loss harvesting: You can sell stocks and buy an equivalent (but not substantially identical) fund in another account. That changes your tax basis on the stocks and can be reported as a capital loss. That can lower your taxable income and save on taxes next year. This only works in a taxable account. If you’re not sure how to do this correctly, consult a financial advisor so you do this correctly.
Avoiding starvation, bankruptcy, or foreclosure: If you have no other choice but to cash out and get money to avoid catastrophe, do what you have to do. But, if you unplug those investments, you typically lose money in the long run.

4. Listen excessively to the news

There is some valuable information on the news, but most of it is sensationalized. Watching too much news can lead to depression, confusion, and alarm (see #1 in this section).

Get your news from reliable sources, like an actual first-hand account from people that are making decisions in your local/state government and the federal government. Don’t rely on pundits and news anchors to give you unbiased opinions. You’ll make decisions based on wrong information.

5. Go massively into debt (HELOC, personal loan)

I highly recommend avoiding debt if at all possible. Using a HELOC or a 0% interest personal loan is not sophisticated. It’s dangerous! 90% of people who take out those loans don’t pay them back before the 0% interest rate expires. You’ll end up making interest payments you don’t need to make.

Cut expenses, tighten the budget, pivot your business model, or try for some side hustle work before you go into debt. Big loans can turn a financial mess into a full-blown crisis!

6. Time the market

Time in the market is more important than timing the market. On a multi-decade time horizon, if you miss just the 10 best growth days in the market, your returns drop by half!!! You only need to miss 10 days to lose half your returns!

Here’s another crazy statistic: most of the best days occur within 10 days of the 10 worst loss days. If you think you can thread that needle, go to Las Vegas and play roulette instead. That’s a lot cheaper, and at least there’s a buffet (except during coronavirus (COVID-19)).

Here’s the truth: no one can consistently time the market. Don’t cash out, don’t try to time the market. If you have money to invest, just get it invested. Don’t try to guess which day is best.

7. Cash out a 401(k)

Again, if you have to do this to avoid a bankruptcy or foreclosure, then do this as a last resort. However, you’ll pay a 10% penalty plus your tax rate to do this. Also, you unplug the investments and you can end up cutting your long-term returns by half if you miss just a few of the best growth days!!

No, you’re not “paying yourself the interest on the loan.” This isn’t a sophisticated strategy. It’s like detonating a large explosive device right in the middle of your retirement plan.

Your plan to pay it back before the penalty gets assessed only works if everything works perfectly. How often do things in a crisis work perfectly? Not often.

8. Suddenly invest in gold

This is one of the dumbest financial myths out there. “Gold is the only thing stable in a crisis.” The truth? Gold and other precious metals have dramatically underperformed the market for decades. It’s not a good investment.

The truth is, if the whole economy tanks and we lose everything in the stock market, gold will be useless too. We’ll go back to subsistence farming at that point. You’d be better off buying bullets, canned goods, and seeds. Don’t bother with gold. Stick to stocks, bonds, real estate, and your business if you want to invest in something.

9. Chase a big win

“I’m going to buy airline stocks!
“Everyone’s watching Netflix, so I bet their stock is going up!
“Time to invest in oil while the prices are low!”

I’ve heard all of those online. You DO NOT know how to pick a big winner. No one does. Stick to steady, dispassionate, calm, measured investments with long track records of steady growth. No one wins at roulette, and you probably won’t win by chasing the “big win, either.”

Final Thoughts

Basically, this all boils down to a simple plan. You ready for the plan? Don’t panic, stay the course, take care of basic household essentials, and keep working (or looking for work).

Reach out to friends and family for help and support. Read, learn, and communicate with your family. Above all, stay positive! This too shall pass. Don’t make crazy decisions during a moment of panic that will make it even harder to recover when we come out of this lockdown.

You can do this!

New podcast launching!!

We are launching a podcast on May 18th, 2020! It’s going to be fantastic!

We’re going to bring physicians and industry experts in to teach us how to run our businesses more successfully and master our personal finances. You’re going to love it! Go to www.thescopeofpractice.com/podcast to learn more.