Unquestionably, the current COVID-19 pandemic has left a big dent in the history books, but a bigger one for our day-to-day, for most of us, is the mental and financial strain.
The only solution to drowning our coronavirus grief is to wait it out, be patient, and hopefully, when the vaccines comes out, get inoculated. In the meantime, though, it’s understandably hard to cope up & manage pecuniary demands.
So, in the spirit of togetherness & strong solidarity, here are the top financial mistakes that one should avoid, until we get out of this hell-hole.
Mistake 1: Not Paying Off Your Debts
Definitely not here to judge, but if you do have the capability and the means, I’d highly recommend continuing to pay off your debts. And while the financial institutions are offering payment deferments out of their good heart, the interest continues to pile up.
It would be a different story if some of your debt is forgiven; but, if not, my advice would be to keep paying them off. It’s not that the debt is going away.
Obviously, no one would know your financial situation better than yourself, I just want you to consider this option!
Mistake 2: Selling Your Stocks
I know it’s excruciating to see your money sinking down in the stock market right now, but if you entered into it for the long game, I’d highly suggest you holding-off, waiting out this pandemic, and likely experience a great recovery.
Personally, as of writing this post, I’ve already lost about $2k, but I am not panic selling.
Mistake 3: Not Taking Advantage of All the Financial Relief Options
In contradiction to mistake 1, if you do really need the financial relief, please get in touch with your financial institution. Don’t let the long wait times hold you back from saving some money now, so that you can buy more time for yourself.
In fact, a lot of the landlords are also offering some kind of rent & mortgage relief. And lastly, even if you haven’t heard anything, there is no harm in talking to either your credit card company or the institution with whom you have an existing debt to see if they’re offering anything.
Mistake 4: Increasing Discretionary Spending
To battle the losses suffered due to COVID-19, a lot of eCommerce businesses, and probably almost everyone is offering huge discounts and promotions for their products.
Once more, not here to judge you, but one thing you can easily slip on is to keep ordering items online. I’ve heard from a lot of people that a positive event they are going through right now is the experience of saving money. It almost felt like they were new to this concept.
We’ve mostly been accustomed to going out during the weekends, or trying that new restaurant, or a bar for that matter, or things like clubbing, general partying, etc. Since movement is super restrictive right now, we’re not spending that money that we would be otherwise. That pretty much, leaves us with two options.
- Save that money (which I am recommending).
- Or use that on other types of discretionary spending.
The reason I am leaning towards number 1 is because the job market is already tough, and it’s likely not going to get better for a long time. In light of that situation, I’d advise building up as much of a money cushion as you can. Plus, if you’re one of the lucky ones, and still have a job (and will in the future), the extra money you saved could be used for a more significant purchase later, such as a house or a car.
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Mistake 5: Pulling Money That’s Earmarked for Retirement
Similar to not panic selling your stocks, the other mistake to avoid is to pulling out the money that you’ve planned for retirement. It is vital to think long-term here!
If you have the savvy and the financial means to get through this without using any sort of financial boost, I’d recommend leaving your retirement money where it is! Plus, you’ll likely have to pay the penalty for early withdrawal.
Mistake 6: Not Monitoring Your Checking and Savings Account
Whenever there is a big crisis, there are always opportunists who are on the hunt to take advantage of the situation. With the government and big financial institutions extremely tied-up to manage the ongoing pandemic, hackers have a bigger opening into gaining access to your money and banking credentials.
It would be foolish not to monitor your balances every day. Stay on top, and keep an eye out on any discrepancies (even if it’s 1 cent). If there is an iota of uncertainty, immediately get in touch with your bank!
Mistake 7: Delaying Filing your Tax Return
It’s great that the IRS has offered an extension to file your taxes, delaying them for no reason other than your laziness is not going to benefit you in any manner.
If anything, and if you really need the money, go ahead and file! The refund is typically issued within three weeks of filing your tax return.
Moreover, it’s not like you can completely avoid filing your tax return, so no point in procrastinating the inevitable.
I know a lot of us are discussing that we have to learn to live with this new normal. I don’t believe it is. And yes, we don’t have to learn to live with it; we just have to get through it while ensuring we don’t go crazy mentally and financially. Hopefully, this post helps with the latter!