The coronavirus pandemic is creating anxiety among people everywhere -- how could it not? As the disease spreads, it becomes ever more likely that you'll know someone who has contracted COVID-19, and the results can sadly be life-ending.
Meanwhile, personal finances have been taking a huge hit. Jobless claims reached 16 million as of April 9; the S&P 500, the benchmark of U.S. financial markets, is down close to 19% from its high in mid-February; and the government's stimulus program has had administrative quirks resulting in money not getting into Americans' pockets quickly enough to make a difference. With all corners of the media anticipating a recession, how could you not be worried about your finances?
Whether the volatile market is stressing you out, you've lost your job, or your retirement savings are taking a hit, there are certain financial moves to make to protect your money.
1. Analyze and adjust your risk tolerance
Most investors are familiar with the concept of "risk tolerance," which simply is the amount of volatility you're comfortable with in your pursuit of investment gains. Many brokers will ask you about that when you open an account with them. In general, younger investors are in better positions to take on more risk because they have more time to wait for their investments to return to growth if there's a bear market or, in this case, a worldwide pandemic. As you age, your tolerance for risk may decrease as you move toward preserving your money and more conservative investing for retirement.
But the only time you really learn about your true risk tolerance is when it's tested -- and it's being tested now -- and for many, for the first time. You may think: "Yes, I'm young and can wait out this crisis," but in reality, you may be checking your portfolio non-stop and feeling sick to your stomach when markets drop 7% in a day.
If that's the case, review your portfolio to discover if you're truly comfortable with the amount of risk you've taken on, and adjust it by putting money in more conservative investments like cash, CDs, or bonds so that your balance of stocks/fixed income adds more positions in the latter. This may result in lower future returns, but also may result in better protection of your capital.
While it may be too late now to deal with this current situation, you can begin moving some assets into conservative areas so you don't experience as much downside when markets pull back the next time.
2. Handle your debt creatively
If you're one of the lucky ones who have little to no debt, then the current coronavirus pandemic is just financial business as usual. But if you're struggling to pay your debts because you've lost your job, many credit card companies and banks are willing to help you out.
For instance, if you have a credit card issued by JPMorganChase (NYSE:JPM), you can delay "up to three payments on your personal or business credit card if you've been affected by COVID 19." Citigroup (NYSE:C) will waive your minimum payment due for two cycles. Call your creditor directly to discuss programs that are specifically available to you. This way, you can keep more money in your pocket until the crisis ends.
3. Investigate government programs
The best way to protect your money during any crisis is to make sure you continue earning it. But if you've lost your job, that's not going to help you achieve that goal. The federal government, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is trying to help.
The first place to look is for unemployment benefits. In addition to what you're entitled to, the CARES Act has extended benefits for 13 weeks and will provide an additional $600 per week. And self-employed workers, who normally wouldn't be covered by unemployment benefits, will now also be eligible.
4. Look for discounts
With businesses throughout all industries struggling, there are many options for investors to save money and protect what they have in the bank. For instance, some auto insurers like GEICO and Allstate are offering 15% discounts for policies that are either already in place or bought in the next six months. That's 15% of extra money in your pocket instead of in theirs.
Some of your favorite retailers, forced to close their brick-and-mortar stores, are also offering great sales of up to 25% or 30% on their online merchandise. If you've been waiting for an opportunity to purchase products you love at a lower price, check their respective websites to see what's being offered. Also, take advantage of any coupons that are sent your way.
Americans are working their way through one of the most trying times in our history. But that doesn't mean you can't protect your money. By following the four above steps, you'll leave more money in your pocket. And if you aren't in a position to take advantage of all of them now, you'll still be better prepared when the next unforeseen crisis hits.