There’s no doubt that the current events unfolding around us are worrying, stressful, and potentially dangerous — both to our physical health and our financial well being, too.The reality is that we’re in the midst of a human and financial crisis. So what can we do about this? What should we do to prepare and protect ourselves from the worst?

No one knows for sure how or when this will end. We can’t personally influence the markets or the economy. There’s a lot of uncertainty and much that feels out of our control right now. What we can do, therefore, is to turn our attention to what we can control. Here’s what you can focus on right now to help you deal with this situation and handle your personal finances during a major crisis.

Build Up Cash Reserves

Cash is king, especially when things feel shaky or uncertain. Cash can provide a certain amount of security and peace of mind. If your normal sources of income are disrupted by this crisis, having cash on hand means you can better withstand a period of reduced (or no) pay.

We always advise clients to maintain an emergency account for cash reserves. Ideally, you should bank 3 to 6 months’ worth of expenses precisely for times like these — but if you don’t have that much saved yet (or haven’t started), don’t waste time regretting past inaction. Do something now!

Start putting away more cash into your emergency fund now. If you’re in a position where your job is in jeopardy, this is going to become even more critical… even if you already have a “full” emergency reserve account. It might be wise to add to your existing total while you can.

Remember, you can always reallocate cash from a too-full emergency fund later once the danger passes. But if you find yourself in a position where you need cash, you’ll be glad you went a little overboard on the savings.

Cut Costs Where You Can

Of course, adding to your savings assumes you have cash available to use for this purpose. If you don’t and need to free up funds within your cash flow, it’s time to revisit your spending and consider paring back in certain areas of your budget.

You’re probably already spending less on social activities and transportation by default. Make sure that cash doesn’t just go back out the door on something like Amazon purchases or takeout food orders! Put dollars you’d normally spend but don’t have to right now into your savings.

Even if you don’t fear losing your job or income stream right now, reducing expenses where you can might be a good way to handle your personal finances during a crisis. Again, you can always ramp up your spending later once the threat has passed — but for now, it doesn’t hurt to be safe and add a little extra padding to your cash reserves.

Evaluate Your Debt Balances

If you have loans, be it a mortgage or student loans, our current situation might actually be an opportunity for you to save some money. The Fed has lowered interest rates to almost zero, which means refinancing outstanding debts might benefit you.

There’s a flipside to this, however — you won’t be the only one who noticed lower interest rates. Banks have seen an enormous increase in refinancing applications, and the demand has actually caused rates to bump up a bit from their absolute lows.

Even with extremely low rates, you also still need to un the numbers to confirm a refinance makes sense for you. Proceed with caution if you have federal student loans, as you’ll lose some of the borrower protections associated with them.

The same can be said for mortgages, in terms of thinking carefully through the decision before leaping in with both feet: remember that refinancing resets the clock on your loan term, generates a whole new set of closing costs, and might not actually save you anything if you don’t plan to be in the home long-term.

Take the Opportunity to Invest

Yet another silver lining here is the fact that now could be an excellent opportunity for long-term investors to contribute more money to the market. While no one knows when the markets will see a true bottom, values are down from their peaks right now.

If you are a long term investor or have a long time horizon, now is a great time to be putting money away because you’re buying in at a lower cost.

You wouldn’t see a shirt on sale and think, “oh, not today, I’ll wait until it costs more because it will feel better to buy it then.” This is similar to what happens with equities — except, most investors do wait until the price is higher and they feel better about buying then!

Or we can put this another way: would you have rather bought stocks a month ago when the price was 30% higher? Or do you prefer a 30% discount? Now is a good time to buy for long-term investors who have the liquidity to contribute a little extra to their accounts.

Times May Be Tough, But We’ll Get Through This

There’s no denying that right now, we’re facing a challenge and a scary situation. People are suffering from both a health and financial standpoint, and you may feel uncertain about what the future holds.

While I wish I had a crystal ball and could tell you exactly what to expect, I don’t have the ability to see into the future. And neither does anyone else, so be careful about buying into predictions!

But what I do know is that crises are part of being human. We haven’t seen this particular situation before, but we’ve been through hard times — and we’ve gotten through them. Focus on what you can control and trust that taking these proactive steps will help you weather the storm.

Questions? Reach out and schedule a call— we are open (and working virtually to keep our social distance!) and here to help.