7 Easy Tips To Deal With Financial Anxiety During The Pandemic
Pandemic or not, finance is an area of life where all of us have struggled a lot at some point in time. But now, with the global pandemic raging like wildfire across the world, stock markets are swinging in the extremes, and with unemployment rates going up and onwards every single day, it’s obvious that everyone’s financial anxiety is at a record high.
So, what do you do in such uncertain times? How do you deal with financial anxiety in those moments when you don’t know what happens tomorrow? In a world, and in a life, where everything feels out of control, how can you manage to hold on to your money? Very simple, you do that by making practical and smarter financial decisions.
Worried about rushing into wrong money decisions? Don’t worry, we’ve got you covered. Here are 7 easy tips to deal with financial anxiety for you to keep in mind while saving for an emergency fund or deciding whether to use your 401(k).
1. Don’t touch your 401(k)
It’s evident for your 401(k) to take a hit due to the current volatile market state. But, that’s no reason to panic or freak out. Don’t sell or invest your 401(k) in ‘hot markets’ just because you see the former dropping and dropping every day. It’s your retirement fund. It’s wise to let it stay with you until you retire.
And don’t you worry! Just as your funds are currently dropping, once the situation improves, they will pick pace and increase again. So, when it comes to your 401(k), treat it as a ‘set it, forget it’ saving. And maybe, if you can, continue to contribute to your 401(k), so when the markets eventually recover, you benefit from it.
2. Have An Emergency Fund To Deal With Financial Anxiety
Saving money should always be at the top of your financial priority list. And with a global pandemic holding its ground against the world, it’s now more crucial than ever to start an emergency fund or to strengthen the one you already have.
If you have a strong feeling about your job insecurity, the best thing to do is to contribute more to your 401(k) while the industry you are in is still stable. Or else, minimize your expenses. Don’t make those extra debt payments (of course, you can’t avoid the minimum amount). Instead, save that amount for an emergency fund. As the way things are going right now, you will most likely need a good deal of it.
You can also find new sources of income (or at least supporting income). Maybe you can work from home to earn some extra dollars or sell the stuff you don’t use anymore. It can be anything, but keep in mind, some side earning never hurt anyone.
3. Don’t Skip Your Minimum Monthly Payment
Having overbearing financial anxiety during the pandemic is terrible as it is. But what’s worse is dealing with that anxiety on top of paying off loans and monthly payments. But, there’s a way to keep your credit score intact while also not losing out on money at the moment. Don’t skip your minimum monthly payment.
Yes, that’s right. Keep making your minimum monthly payments (at least). This will ensure that your credit score stays the same. Also, you don’t have to shell out more money than you want to.
Another possible alternative is to call credit card companies or the lenders who lent you a loan and discuss the payment arrangements. You can even contact the American Bank Association to find out about loan and EMI payment options that could work for you. As for the federal student loans, the federal government has put a pause on the payments and interest charges till September 30. If you are struggling with that, heave a sigh of relief and save up money now, so that’s when it’s time to pay up, you don’t find yourself in a tough spot.
4. Say Goodbye To Unnecessary Expenses
Did it so happen to you that once you were locked up in your home, you found your expenses to be slashed BIG TIME? Yes, the rent, the electricity, and the water bills are there. But did you notice how all those small amounts of money that you spent without a thought on food, concerts, mini-vacations, etc. added up to a considerable amount – and that now that amount is safe in your bank?
The thing about unnecessary expenses is that they seem so negligible. But they aren’t. They might be the number one cause for your financial anxiety. The line between necessary expenses and the unnecessary ones is so thin that we don’t even realize when we crossed it. But staying at home all these months has helped us become aware of what we need and what we don’t.
So, cut off the habit of spending on things you don’t need (at least right now), and put that money into your 401(k) or an emergency fund. Do you still have that gym membership which is practically of no use at the moment? Cut it off. Do you still have that Hulu account on which you really watch nothing? Let go of it. Do you still use that streaming service for music, or is Youtube enough for you at the moment? Cancel the subscription. You get the point.
5. Have A Financial Plan In Mind To Tackle Financial Anxiety
One of the simplest ways to deal with financial anxiety is to have a plan in place. It’s simple. All you have to do is keep track of your finances. Calculate your minimum monthly payments, your rent/electricity/miscellaneous bills, and see how much money you have got after paying it all off. Then spend frugally from that amount wherever you can.
Keep a record of every little expense you make. It will help you understand where and how you can save money. There’s not much you can control about what happens around you in this pandemic. But, if you can manage your expenses and keep a little on the side, that will give you a sense of immense control. That’s where 70% of your financial anxiety will disappear.
6. Think About Refinancing Debt
The Federal Reserve dropped all interest charges on loans to zero as a COVID-19 emergency response. It means good news for your loan and credit card interest rates too. Now is the time to think about refinancing your outstanding debt. Call the credit card companies and talk about existing plans to negotiate the current interest rates.
But be aware, refinancing debt is more complicated an affair than it sounds. Research well before you go for it. The right refinancing will take away most of your financial anxiety, but the wrong step may lead to trouble in the future. Talk to your lender or credit card companies and ensure that all your questions are answered.
7. Stay Calm To Get Rid Of Financial Anxiety
The financial struggle during a pandemic can be most unnerving. You might simply want to not think about it at all. But stay calm. Make a plan to deal with this uncertain time. Save more. Spend less. Keep contributing to your 401(k). Don’t make haste investments (especially when you are not an expert on the subject). Make all the crucial payments and not a dollar extra—research about debt refinancing options and opt for the best one if you like.
These are scary times. But they too, won’t last forever. And if you stay calm through it all, you will emerge out of this stronger, a better, and more financially sound person.