5 ways to protect your finances during the coronavirus recession
Every crisis presents an opportunity.
The Coronavirus or COVID-19 is wreaking havoc around the world, and not just by impacting the health and wellness of the elderly, young and survivors of chronic health conditions.
The virus has had a devastating impact on the US and world economies, shutting
down businesses and stopping regular cash flow to both employers and employees. While many financial experts have been anticipating the dreaded “recession,” no one could predict that this virus would bring with it an economic downturn of this magnitude.
With the Dow Jones Industrial Average (DOW) reaching record lows, many are starting to panic as they watch their 401k’s and other investment balances plummet due to fear around the spread and impact of the virus. Now more than ever is it critical that Black communities lean into financial education to survive and thrive. While many of us may experience some discomfort, here are five ways you can still insulate yourself financially during this economic downturn.
1. Don’t panic.
Mass hysteria is on the rise with statistics about layoffs and plummeting stocks being plastered all over the media. The best thing you can do is not panic and focus on the
Younger investors should leave their investments to recover over time, while
people nearing retirement might have more cause for concern. During this time most
advisors are more than happy to discuss with their clients ways to save and hedge
against these losses. According to Jerome Myers coach for financial consultant, many advisors have already prepared for the recession.
If you haven’t yet, contact a financial advisor for investing advice. Markets always cycle through periods of highs and lows. When most people begin to see their portfolio balances drop they become tempted to sell.
Selling should be an absolute last resort. In fact, many savvy investors are actually buying low so they can take advantage of the gains when things balance out. (Note: This is not investment advice)
2. Take inventory and prepare.
This scare has many businesses closing their doors leaving many unpaid workers. As a regular practice, I advocate paying yourself first through regular savings and regular investing. This is what we have practiced for.
Organize your financial obligations, take inventory of your reserves, and prepare to lean out expenses. This includes having some cash on hand. But what about those who have no cash savings, and haven’t paid themselves first?
You have to eliminate unnecessary expenses and create new streams of income.
3. Eliminate unnecessary expenses.
From subscription-based services like Apple, Music, Netflix, Hulu, to dining out, gambling, or anything not necessary, CUT IT OUT.
The silver lining in all of the virus craze is that most locations people frequent will be
closed, forcing people to stay home and thus cut spending…or so you’d think.
Don’t fall into the trap of online shopping while stuck indoors. Dust off an old book, pop in an old DVD or BluRay (remember those?) or complete a puzzle. I’m not saying eliminate all forms of entertainment but I am suggesting you plug up any financial leaks you have as soon as you can.
4. Don’t go out and horde unnecessary supplies.
Toilet paper and hand sanitizer are clean off the shelves. If you are preparing for doomsday scenarios you should probably focus on supplies to sustain like canned goods, disinfectants, dry food, first aid, batteries, candles, etc. Many people are buying everything in sight and over-preparing for an outcome they aren’t sure of.
I’m all for preparing with the essentials– but when you’re spending the little cash on hand on things you might or might not use, you’re taking away from your ability to react in the event of a real emergency.
I recently saw a social media post to the effect of “poor people are buying toilet paper, rich people are buying stocks”. It leaves you with something to think about.
5. Ask about financial assistance programs due to the coronavirus.
Many organizations are doing their part to offer assistance to those impacted by the coronavirus scare, from banks to credit card companies to utilities, and even companies like Groupon.
Ask if there is any financial relief from organizations you do business with, and what support they can provide you during this time of great need.
Bonus Tip: Start a side hustle.
Many people are locked in the four walls of their living quarters during this period of uncertainty. What better time to start (or finish) that book you’ve been
putting off, create the business of your dreams, or reconnect with the
hobby you have that’s worth exposure?
There are many educational institutions providing free courses online, YouTube videos, paid online courses, and more that you can use to build a new skill and monetize it. In fact, there are tons of white label courses to resell online.
Put in the work and get that extra stream of income. Learn about investing in the stock market or real estate market during the recession. The possibilities are endless.
Although this is a very serious moment, it’s important to maximize the opportunity present to reflect and refine your financial habits and behaviors, cultivate new skills, or pull the trigger on passion projects simply for your own good.
Stay safe yall, and through it all– don’t forget to wash your hands!
Rahkim Sabree is a Connecticut based hybrid-entrepreneur with nearly 10 years experience in Banking, a 2x author, and a non-profit co-founder. He is active on Instagram/twitter @RahkimSabree. Visit his website at RahkimSabree.com where you can find his book “Financially Irresponsible.”