April Finance Tip

The Scoop:

As we near the two-month mark of COVID-19, I want to share a few questions and answers to some financial questions you might be asking: 

Should I continue to conserve Cash?

 Yes, continue to stockpile your cash.   The economy is going to take time to rebound.  Getting back to work, back to full pay, and back to normal will take a little time.    In fact, I’ve recently heard financial gurus talking about not paying your credit card in full each month.  Instead make the minimum payment to put more cash in the bank if your emergency fund is a little skinny.     In the past this was a huge no-no, but now it makes sense to consider.    If you have less than four to six months of expenses (not salary, but your actual monthly expenses like mortgage/rent, utilities, gas, minimum loan payments, groceries, etc), think about cutting back to pay only the minimum on your credit cards to build up cash-on-hand.  

What should I do with my Stimulus Check? 

  • If you are struggling for basic needs (food, shelter, medical) use the funds to take care of your immediate needs.  
  • If you don’t have four to six months of expenses (see above definition) in a savings account ready to access tomorrow if needed, your stimulus check should go straight to the savings account.  I know savings accounts are basically paying zero interest but if an emergency hits, you have it covered.  
  • If you have basic needs and four to six months emergency savings covered… I would still be conservative and put most of the dollars in the bank after catching up on outstanding bills.   You can always pull it out and pay down debt, buy that new couch, etc. once this crisis has passed.  

What if I am still employed, still working full time, maybe from home, and keeping up with all my expenses?   

While this is great news, it could still change.   Many companies are just barely holding on.   If there is a surge or if your state opens too quickly, we may see a second round of layoffs.     Recently there was news that some layoffs may last longer than initially anticipated, and some companies are now closing permanently.     So, chin up, but keep looking for ways to cut your expenses.   My husband is on a reduced work week, and we made the decision to temporarily halt our flexible spending dependent care and health savings accounts.    This has put a few hundred dollars back in our pocket each month.    It may not be ideal to stop these accounts permanently, but for now we feel better about having more cash on hand, not knowing what the next few months will bring.   Where else can you save money?   What can be renegotiated, postponed, or delayed? 

Can’t I treat myself?

We continue to shelter in place and things are slowly starting to reopen in some states.  We have all been housebound and relying on Amazon, Target, Home Depot and the local grocery stores for all our needs and the thought of actually shopping, in a store, for non-necessities sounds downright exciting!  I don’t want to rain on your parade, but this is not the time to go out and spend cash to celebrate.   If you must treat yourself, make it small:  dinner out, a trip to the ice cream store, a bouquet of flowers for your table, a new book, a saw blade for your tool bench, Spring pillows for your couch… you get the picture.        

Should I continue to leave my 401K and investments alone?    

So last month I confessed I had not looked at my financial position at all.    The stock market had been diving, and I knew my investments, retirement accounts and 401K were probably way down.   I said I was staying the course, so there was no sense to look and worry.   I stayed put, I let it be.  I continued to invest in my 401K.   Remembering we are in it for the long run, and the market will always go up and down.   If you pull out when the market is down, you lose out when it goes up again; and IT DID start to go back up!   In fact, in late March, there were multiple reports that the stock market had its largest one-day gain since 1933.   The market continues to experience up and downs, but I’m not changing my position of leave your 401K alone.    Even if your company drops its match this year (which we will start to see as companies look for ways to survive), keep contributing… it’s like the market it is on sale now.   So, continue investing at these great sale prices!

Hang in there…

We will get through these times.   If you are in a good position, consider donating your time or money to help others.   You can help in small ways;  by writing a quick note of encouragement, reaching out to a neighbor or elderly person to offer your support or just to say hello. You could, write a message of hope in chalk on your driveway or put a heart in your window for others to see.   It feels good to do something and bring a little joy to someone’s day.        

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