It’s been quite a roller coaster few months, and unfortunately it looks like the roller coaster is only going to continue. Thinking back to March, when this was all starting to go down, it was kind of a scary time. Many businesses, both small and large quickly furloughed and/or laid people off right away. Others waited a few weeks or months and then either let people go, or brought them back. The word uncertainty comes to mind as really being the hallmark of this time. Folks that are still employed are probably a bit worried about losing their jobs, and those that have been laid off are of course worried about finding a job, and those that have been furloughed are worried about their return date not actually happening. I’ve very thankful that Mrs. Money and I fall in the employed category, but I’d be lying if I said the fear of layoffs hadn’t crossed my mind. 

I’ve been trying to focus more on things that I can control, and then spending my time and effort on those things rather than worrying about things outside of my control. I cannot control COVID and I cannot massively impact how my employer does in the marketplace with COVID going on. However, I can control my work habits (i.e. giving 110%) and can also control my personal finances. In an effort to potentially encourage or help you make better personal financial decisions, I wanted to open up and share some of my thoughts on ‘managing your money during COVID’. 

Make the safety net larger

If the past 6 months have not convinced you of the importance of an emergency fund, I’m not sure what will! I’d always known and followed the principle of having 3-6 months of cash set aside in a separate savings account for emergencies only, but COVID has really brought to light the importance of having a safety net and the most logical safety net I can think of is an emergency fund. There have been multiple times in which just thinking about layoffs made me a) feel thankful for having an emergency fund but b) wonder if I had enough in it. 

In such a time as this, it’s probably wise to review your emergency fund, start one if you don’t have one and potentially increase how much you have in it. As a reminder and rule of thumb; start an emergency fund by getting $1,000 in place. I recommend keeping this in a completely separate bank account, that way you’ll be less likely to touch it in a non-emergency situation. There are plenty of good High Yield Savings Accounts (HYSA) that you can use to earn more interest, as it’ll just be sitting there. Once you’ve got $1,000, have a sigh of relief  and then keep working to build it up to 3 months of expenses and then 6 months. Of course expenses in an emergency situation like getting laid off will look very different from normal expenses in our day to day (i.e. I imagine you won’t be eating out as much) but expenses will still be there. 

In today’s world for me, as I mentioned previously, still thankfully employed. Right now our emergency fund is probably stocked at around 3 months of expenses and that’s for both Mrs. Money and I getting laid off or another emergency like that. Given all the craziness, I’ve been working on a little more saving and a little less investing. We keep a few other longer-term savings accounts for cars and house maintenance/repair/upgrades, and although I’m not depositing money directly into the emergency fund, I’m still saving in my other accounts, knowing that I could leverage them in an emergency. If/when things get back to more of a normal; I may invest a little more of that excess savings, but for now I’m being more cautious! 

Finally, it’s good to call out that there are other safety nets in place, hopefully in the form of a severance package from your employer who is laying you off, or through unemployment from your state. However, I’ve heard too many horror stories from friends and colleagues to 100% count on those! Hopefully those nets would be in place and I could leverage them but I’d rather have my own safety net too! 

Coming up with a Plan B

Mass layoffs have been pretty scary, and I’m sure every single one of us has interacted with it on one level; whether it’s actually getting laid off or just worrying and/or hearing rumors about it. I think it’s wise during these times to start developing a “Plan B” for what you might do if things turn south again on a macro level or for you personally through your employer. It’s probably not a bad idea to dust off your resume and make sure it’s updated. Stay close with friends and their work to get a pulse of which companies/industries are doing well. 

Start thinking about what you would do if you got laid off. How long would your emergency fund last? Where would you start applying for jobs? Would you need an immediate side hustle to help make ends meet? There are lots of side hustles in our gig economy whether it’s driving for Uber/Lyft, walking dogs, babysitting, delivering food or even part time jobs. What skills do you have that you could transfer to another full-time role? What industry experience could you leverage to stay within your industry or bring to a new one? 

It’s never easy or fun to think about Plan B but being caught off guard is certainly a worse off place for you to end up! A little thinking and planning now could pay off if things take a turn for the worst. 

Attempting to control spending

Hopefully once you’ve got a solid safety net and a good Plan B, you can rest a little easier, but until then and even afterwards, I think it’s not a bad idea to curb your spending a little bit here and there. Thankfully for some of us it’s almost natural; I’m still working from home and am saving probably a tank or two of gas each month ($60), I’m not parking at work and paying $55 for that, I definitely don’t need any new clothes right now, and our social lives are pretty limited to the takeout/delivery or a porch beer with a friend or two. However, we are spending more on utilities and groceries, which groceries are not cheap! I’m actually spending this month keeping tabs on our eating out, groceries and treats spending so we’ll see how that goes!

Depending on your situation, it could make sense to go a little above and beyond in controlling spending right now. Maybe hold off on that nice vacation (if you’re able to take one depending on where you live or where you could go), hold off on expensive house upgrades, and find little ways to cut back where possible. Of course we still need to eat and have internet with Netflix/Hulu/Disney + but in an uncertain time like this it can make sense to be a bit more frugal! 

Saving, then investing 

Once you’ve got a good balance of spending, have a good safety net and have a plan in place if things get worse, it’s still important to consider investing. As crazy as it sounds, if you’re able to and feel comfortable doing so, keeping your slow but steady investment strategy can make a lot of sense. Although the market really dropped in March, it’s come roaring back since then and if you’d had pulled all your money out and headed for the hills, you would have missed out on all those gains and earning your money back. I’ve learned it’s best not to time the market and slowly yet consistently invest in low cost index funds and that’s what I’m doing. I’m still contributing 9% to retirement (plus a 6% match) and 12% to my employer stock purchase program. Beyond that I am doing a little bit into index funds, attempting to remain consistent! 

Summary

These are strange, challenging and uncertain times we’re living in. Safeguard your health and your finances and make sure you can weather the storm, but also continue growing throughout it!