What is the best way to manage my finaces during this covid-19 pandemic?
@Motherqueen1 The answer here will depend on a lot of factors, like if you're still employed and, if so, how much job security you have.
But right now, we all need to focus on having cash on hand, if possible. This is the rare time where it can be a good move to only make minimum debt payments, even on credit cards. You can start making headway again once things start to get back to normal.
If you invest in a 401(k) and/or IRA, I'd continue to do so if you can afford it, even though the market has been tanking. However, if you're worried you're going to need that cash in the next few months, it could make sense to put investing more money on hold. If you have an employer that matches retirement contributions, I'd still contribute what's needed to get the match, but beyond that, you need to weigh the long-term benefits of investing vs. what you realistically need in the short term.
If you have specific questions about managing your money during this pandemic, please ask away!
I agree this has to be a very individualized decision.
This is my 4th time in my lifetime of 70+ years going through a financial crisis, and 3 of them were caused by external events caused by economic conditions, out of my control, that called for rethinking and modifying my plans.
My career in the 80's was commission based so I was used to irregular income patterns, I was self-employed, children, divorced so some minor modifications in my financial plan were almost routine. If you are often juggling bills and expenses, you really have a head start on the income earner who is sailing along, seemingly worry-free who is unprepared for a sudden shock. The self-employed don't usually have access to unemployment benefits, there was no government bailout for a bad real estate market, one is on their own to make it work.
I shifted to putting every expense I could on charge cards. The most difficult decision was choosing that over withdrawing from my savings and retirement account. The interest on the credit cards was, as always, higher than than the return I was getting on those two accounts, however, mentally I could handle the credit card route better. Once you go through 1 economically caused financial crisis, I think you come out of it knowing it is temporary, the question being "how" temporary. I knew the income would start again, it did and then I used a large percentage of that income to pay off the credit cards as quickly as I could......1 year. I discontinued putting any money in savings or investments during this time. And of course, went into "no unnecessary spending" mode.
When the next crisis hit, my children were adults and I was in a secure relationship with my current life partner. We changed our disaster plan, totally reversing the plan from disaster #2. But our financial situation had changed. We owned a business that almost stopped overnight during the 2008 recession. We laid off 2 employees (I was 1 of them)allowing me to file for unemployment until I found a job somewhere, anywhere, which I eventually did. I took a job in a retail store in the stock and receiving room. It was tough finding any kind of work, I was in my 60's and found out age discrimination is real! When you think of accepting work that may not be in your field, has typically low pay or just might not be your dream job, look beyond the obvious. I worked that stock room with a lady whose sister was leaving her office job; the sister put in a good word for me. I got that position. Networking at it's finest! My partner kept the business open, we had always run it out of our home which turned out to be a huge asset. There was no office rent, or physical building expenses that had to be met. We operated in the black for years before 2008 and had saved diligently. So instead of turning to the charge cards, we drew from available cash savings to exist. We still left our investments alone although, again, we discontinued putting money into investments for about 2 years.
Now, thru this current crisis, we are both retired, so we will once again consider our plan of "attack"! This will be the first time there has ever been any government stimulus that may include either of us. We are living on social security and our investments and savings. And honestly, we are not making many changes to our financial planning other than avoiding unnecessary expenses, a mode we are familiar with and isn't starting out that difficult since we are staying home right now, as suggested.
One of the things that helped us in every situation was a financial planner. I started meeting with a financial planner/adviser long before a crisis hit. I started when I didn't have but a pittance of money to invest, a few hundred, not thousands. They can help you with a plan of action that includes a total financial plan, not just investing, while you work your way thru a financial crisis. I am no way related to or benefit in any way by any promotion of financial planners. It's merely a suggestion for individuals to think about, especially if you don't know where to start.