The COVID-19 crisis hasn't been easy on anyone. Even those who have managed to keep their jobs are feeling the financial strain, and the fact that retirement plan and investment portfolio values are down across the board is demoralizing, to say the least.
There's also job insecurity to contend with. Those who haven't been laid off may be wondering whether they're next on the chopping block. And with the economy largely being shut down, finding a new job is a seemingly impossible task right now. It's no wonder, then, that 60% of U.S. adults are concerned about their finances over the next six months, reports Fidelity. At the same time, Americans have begun taking steps to better manage their money and get a handle on longer-term financial goals. Here are a few smart moves they've been making during the crisis.
48% are cutting back on discretionary spending
Right now is clearly not the time to be spending money frivolously, and thankfully, almost half of Americans recognize that. As such, they're cutting back on non-essential spending -- a move perhaps made easier by the fact that much of the country is still shut down and there's limited opportunity for venturing outside the home.
If you're able to cut back on spending, you'll have a chance to pad your savings, pay down some debt, or get ahead of any other bills that may be coming your way. Of course, now's not the time to deprive yourself of low-cost luxuries that make it easier to get through the pandemic. If you're paying somewhere in the ballpark of $10 a month for a streaming service, don't cancel it unless your finances are truly dire, because that modest investment could be crucial to your sanity in the coming weeks. But if you find yourself with $300 left over from this month's paychecks, hold off on a new gaming system or wardrobe.
44% are working to boost their emergency savings
Given the shaky state of the U.S. economy, now's the time to err on the side of having a healthy level of near-term savings. It's encouraging to see that a large of Americans are aiming to boost their emergency funds, and if you don't have at least three months' worth of living expenses available in the bank, you should aim to do the same if your paycheck has held steady (if it hasn't, saving money just may not be feasible right now).
That said, with unemployment levels reaching a historic high, it wouldn't hurt to have more like six months' worth of living expenses tucked away in the bank, so even if you're at that three-month mark, it pays to aim higher. This especially holds true if you're the sole breadwinner in your household and losing your job could mean losing health insurance for your family.
15% are investing more money in the stock market
The stock market has taken a hit thanks to COVID-19, and so many investors are shying away until things calm down. But actually, now's a good time to put money into the market, because although stock values have come back up a bit since their lows earlier this year, there's still plenty of opportunity to buy quality investments at a discount.
But if you're going to buy stock, make sure you're taking a long-term approach to building that portfolio. We don't know if the stock market is going to crash again this year, or whether it will slowly but surely leak value as dire unemployment levels hold steady or even worsen. As a general rule, you should only invest money in stocks that you won't need for other purposes for at least seven years. That way, if there's a downturn, you have time to ride it out.
It's easy to let panic overtake logic at a time when the entire country is operating in crisis mode, but the good news is that many Americans are taking steps to improve their finances rather than just giving up. Take a close at your financial picture and see if there's a way you can make some positive changes in the coming weeks. Doing so could give you some much-needed peace of mind, not to mention set you up to better weather the ongoing storm.