The COVID-19 pandemic and the social distancing it has necessitated has created an unprecedented economic situation in America. Millions of people have been left without work, businesses have been shuttered, and the market has seen some major down days in recent weeks. 

In response to all that's going on, it's easy to give in to panic and make shortsighted decisions about your finances. You'll want to avoid this so a temporary economic downturn doesn't have long-term harm.

It can be tough to stay calm amid such turmoil, but these three steps can help you make levelheaded choices about how to handle your money. 

Older man grabbing piggy bank away from outstretched arms.

Image source: Getty Images.

1. Avoid checking your portfolio balance every day

The stock market has had some really bad days in recent weeks, as well as some good days. If you're constantly watching your portfolio, the emotional ups and downs can be too much to take. 

In fact, when you see stock prices tumbling, it's far too tempting to sell out of fear. But if you've invested in high-quality companies, what you end up doing is locking in temporary losses and putting yourself at risk of missing out on the recovery.

If you've invested for the long term, these daily gyrations shouldn't matter much to you, so avoid the temptation to obsessively watch your balance and react in real-time without careful consideration. 

Instead, sit back and wait out the volatility -- unless, of course, you want to invest more to take advantage of lower prices when stocks are on sale

2. Consider historic trends in the stock market

If you're panicking about recent events in the market, remember this is only a small snapshot in time. 

The market has been through periods of high volatility in the past, and it's also seen some periods of major decline -- including, in most of our lifetimes, the bursting of the dot-com bubble and the financial crisis of 2008. 

Through all of it, history shows the market produces around a 7% reliable annual return. And there's no reason to think history won't continue repeating itself. 

So while you may not make 7% this year if the coronavirus causes an extended recession, if you learn the lessons from the past, you have good reason to believe the market will perform as expected over time.

3. Review your investment strategy to make sure you're still confident in it

While investing in the market should help you earn a reasonable return over time, that's only the case if you have a sound investment strategy and an appropriately diversified portfolio. If you have too many of your eggs in one basket and you chose a bad basket, you could end up seeing long-term losses that are hard to recover from. 

So while you don't want to panic sell, you should check your asset allocation and consider whether you're invested in the right things. If not, this is a problem to correct so you can be confident your investments will weather the coronavirus crisis and perform for you over time.

If you want to protect your finances, don't panic

It's natural to be afraid both about your health and your finances during these turbulent timesBut follow public health recommendations and keep your cool about your finances, and hopefully you can come out of this without the pandemic derailing your future.