6 financial lessons from 6 months of COVID-19
It’s been six months since the financial fallout from COVID-19 infected the U.S. economy. During this time, I have heard from thousands of you, some who are still struggling with a financial crisis. Many others are OK but need guidance on how to navigate various money issues. Here are my six financial lessons (so far) from the pandemic.
Lesson 1: Go back to the basics. When dark times loom, it’s best to get back to the basics. Start by assessing cash flow — what’s coming in and, more importantly, what’s going out. Never has it been more important for everyone to get comfortable with electronic bill paying, tax filing and record keeping.
Lesson 2: Negotiate, negotiate, negotiate. If you don’t ask, you don’t get. If you’re struggling with bills, let your lenders know and negotiate with them. You have more control than you think you do, so don’t be intimidated by large institutions or smalltime landlords.
Lesson 3: Seek help. Yes, state and federal government programs can be rife with bureaucracy and, yes, it may take hundreds of persistent phone calls, but those who toiled often found meaningful financial help by sticking with it. If you are truly suffering, don’t be ashamed to seek the counsel of a bankruptcy attorney, who can advise you when it’s time to make that difficult decision.
Lesson 4: Review (but don’t touch) your investments. The past six months have been a prime example of why timing the market does not work. Back in March, many of you were tempted to throw in the towel and bail out of your investments. Those who were wise enough to fight those emotions and sit still were rewarded with a rapid recovery.
Lesson 5: You can save more than you thought. COVID-19 has provided a crash course in just how much money is available to save. Gone are the days when cash flow categories like restaurants, clothing and travel are deemed “essential.” This is not to say that you should live like you are under lockdown forever, but the period has been instructive when it comes to squirreling away money.
Lesson 6: You are not alone. In March, I shifted my podcast from a twice a week schedule to a daily one. I did so because so many of you were worried about stabilizing your finances, protecting your nest eggs, and mostly because you were in need of financial therapy. It’s tough making rational choices during uncertain times. When fear kicks in, some of you felt like you must do something, anything, to protect yourselves. Others became immobilized by fear and inertia, and needed someone to nudge you along.
I have been honored to be a person who was able to acknowledge your emotions and affirm that it’s OK to feel them. I have also been happy to give readers, listeners and viewers a friendly nudge to make money moves that are in your best interest, and maybe even a kick in the rear for those who have felt stuck. We’re all entitled to our freakouts and a little bit of time sitting on the pity-pot. But we also need to take smart actions to see ourselves through crises, and to position ourselves to thrive during the eventual recovery.