The complexities of getting the most out of your money can be complicated, but according to almost any expert you ask, the basics of personal finance are very simple. They will tell you things like: Have a budget. Spend less than you earn. Automate things to save without having to do anything every month. Pay off high-interest debt first. Create an emergency fund, among other austerity recipes that many of us know.
We’ve all heard this kind of sensible and simple advice before. But the same experts who routinely come up with these ideas now say that, thanks to the pandemic, you may want to ignore most of what they’ve been saying for years.
“Money is king in a crisis.”
With the coronavirus crisis entering its seventh month, the economy stagnant, and many of us feeling insecure about our income, these are not normal times. So when Apartment Therapy, a lifestyle and home decor blog , recently interviewed personal finance experts, most of them agreed that now may be the time to drop your long-term goals in a second. flat and focus on short-term cash flow.
“Usually we like to see people pay off their debts mercilessly once they are paying more than a month or two of out-of-pocket expenses,” said Julia Lorenz-Olson, co-host of the PBS show Two Cents.
Instead, right now, hold onto every penny you can. “Money is king in a crisis: the more you have, the more options [you have] available,” according to Olson. “Any extra money you might get from a stimulus check or a windfall, keep it in cash.”
Personal finance gurus generally hate credit cards, but 2020 is making them rethink the role plastic should play in your life. Notorious credit card enemy Suze Orman, for example, has long insisted that you should use cards only if you pay off your balance in full each month. But a few months ago, he told Business Insider that the current crisis has changed his mind.
“You have to keep every penny you have,” Orman said. “And what that means is that, if you have an available credit limit on your credit cards, I would personally be charging as much as I could on my credit cards, keeping the cash I have absolutely safe and sound and paying the minimum payment. owed on my credit cards when the bills come in. “
The experts at Apartment Therapy agree, even if increasing your balance will affect your credit score. “Are you likely to move in and need a good credit rating?” asked Wendy Barlin, CEO of About Profit. “If you’re not moving, which is most likely, don’t worry about your credit score right now.”
Don’t be a slave to your budget
The fundamental advice of all the experts is that we live in extraordinary times, and if that means that you have to throw your usual budget and your savings plans out of the window, do not punish yourself. Obviously, you still have to try to be as sensible as possible with your money, but right now is not the time to be rigid with your personal finances.
“During an age when fear is natural, it is more vital than ever not to fall into the trap of fear-based decisions,” warns the Chief Financial Officer of the National Urban League, Clavin Harris. “Be prepared to be flexible about spending, saving and investing, but focus on the long term.”
The last thing you should add to your current stress and anxiety is unnecessary guilt for your money. “
* By Jessica Stillman, at Inc.com