When I began to cover COVID-19 back in January, I started to worry about the implications this novel coronavirus had for our health, our healthcare system and infrastructure, but also what it meant for the financial stability of our immediate and extended family. Would our jobs be at stake? Would everyone be taken care of? Was our money protected in case this was a ‘worst case scenario’ situation? Would my husband and I be able to carry our immediate family through safely and financially through this crisis?
Money matters are a taboo subject. We don’t like to talk about how much we make, how much we should be saving, and many of us don’t have much finance training, unless we’ve sought it out or inherited generational knowledge. Not having had the latter, I’ve made the former my priority. I’ve made it my mission to learn and talk to money whenever I can, but especially when I think it will make a difference for others. Hence the motivation for today’s post.
Science says that socioeconomic status – or our social standing, often measured as a combination of education, income and occupation – is closely tied to health outcomes and health disparities. It is one of the most prominent social determinants of health. As a health disparities researcher, first and foremost, I am here to tell you that if no one has told you to think about your wealth and income security during this pandemic, you absolutely should think about doing so. It was shocking to me to hear that despite the slowdown of Amazon shipping, and no in-store shopping, sales on social media were soaring for affiliate sales. SOARING was the exact word used. Who were all these people shopping, I thought? Can they afford to shop even though their jobs might be at risk? On the other hand, I thought, perhaps they are the lucky ones. But do they know that now is not the time to shop anyway??
I have personally taken a very conservative financial approach with our money since we went into quarantine a month ago. I’m used to re-selling all my items once I’m done using them, but as I started to see more and more stories about job losses (>10 million people have filed for unemployment), and people failing to adhere to social distancing recommendations (more people likely to get sick and die), it occurred to me, liquid money and assets are what matters most in times like these. For that matter, all the clothes, shoes, etc, that I own, do not translate into wealth if there is no one who can buy them from me! My husband and I came out of the 2008 housing crash unscathed, but there are many others who did not. In many ways, this pandemic is far worse than that housing crash, so how the markets will fare remains to be seen. Best be prepared for that worst case scenario, I thought.
So, I called upon a friend who knows more about finances than I do, to walk you through money matters during a pandemic. Why? Because in order to ensure positive health outcomes in the future, you have to secure yourself financially now. We have to narrow that inequality gap, and becoming financially savvy is one way you will be able to accomplish that. I wish I had learned some of these things when I was younger, so I’m trying to share this now with you, so that you can start off earlier than me. 🙂
Below is a post from Lauren Pearson, founder of The Wealth Edit. Her blog brings you free and paid-course content to make you financially savvy. One blog post in particular “Coronavirus and Market Volatility” really struck a chord with what I was observing as a finance novice, and thought, ‘I bet my readers would love to hear from someone like her during this time’. So with that, I bring you her wisdom, during this time of COVID-19 craziness.
Money matters during a Pandemic
We are all adjusting to a new normal – our kids are home for many of us, our spouses are home, we have a new “office,” and we are worried about our public and individual health. So how are we feeling about our money?
Last week I read that for some of us, this pandemic is like a sprinkle, and for some of us this is like a hurricane. Some have lost their jobs, some have had to lay off employees, and for the blessed few, very little is different.
If you are like me, my family is spending money on food in ways we were not before. We were big on take out, and now we cook nearly every meal. Even though I am surprised by our grocery bill, I still believe in this category we are probably saving more than we were before, which is a good thing. Add in babysitters for date nights or evening obligations, we may be feeling like our pockets are more full.
What I would like you to do is to think strategically about your money. Right now. As women, we are taught that talking about money is taboo. What I propose to you is this doesn’t matter. Not in a pandemic. It is our responsibility to be good with money, and to educate ourselves quickly. This cultural taboo is bad for women, and puts us at a disadvantage.
Yes, I am bombarded now on Instagram with sales from my favorite stores. Tempting? Yes. Important? No. What is important is to reframe your thinking around spending. Think about the decisions you are making for the health of your family. You are more than likely social distancing, only going to “essential” stores for purchases. Think about your finances through this same lens. What is essential? What purchases are really going to enhance your life? What items will last, and do you need them?
For my family, my kids’ camp will be canceled and our trip overseas will be canceled. This will mean I have five figures coming back into my bank account. It would be tempting to feel “overfunded” and to “splurge.”
At the Wealth Edit, our private membership community, we have created a Financial Minimalism course. I encourage everyone right now to practice Financial Minimalism. Why now? First, we have time to think about it. Second, we have been cut back (online sales being the great exception) to the essentials, so now we are forced to see what is truly essential. What a gift! Use this time to your advantage. What if instead of getting better things, or our economy, gets worse? I’m not suggesting it will, but I suggest you pressure test this theory within your household. We also do a personal recession audit (along with one for business, if you are a business owner). Having some arrows in your quiver as it relates to your finances will only be helpful.
Here are a few pandemic tips for you to follow to keep your wallet and your family safe:
- Observe your spending and income. Write it all down. Just for a week. This is called cash flow (what is coming in, what is going out). I suggest writing everything you spend down twice. Once in the notes of your phone as you are spending, and then once at night in a notebook. This will be the first step towards conscious spending. Then write “E” next to the essential spending. This will come in handy to have this awareness, in the event you have to cut in the future.
- Do you have money coming back to you? Stimulus, refunded trips, etc? Have a plan for this money. Of course I am going to encourage you to invest these dollars. First in an emergency fund, because everyone needs 3-6 months net income in cash for harder times. Then, if there is money left, invest it.
- Don’t fall for the online sales! Just because your favorite brand is on sale for 40% off, doesn’t mean you need anything right now. I don’t shop online after 5 p.m. Create a plan for your spending, and execute on this. Don’t spend outside of this, if possible.
- Know your financial stuff! It’s okay not to know anything right now, but find a venue to learn. If you want to try the Wealth Edit, we will give CIA readers $14 off their first month of membership. We would love to have you – use code CIA14 at checkout. I know, counterintuitive for me to ask you to spend, but the fact is this content, if consumed carefully, could save you significant money. Plus you get an amazing community of smart and interesting women who are also committed to talking about money.
CEO, The Wealth Edit
I hope you will gain some food for thought from today’s post and find ways to build some of these tips into your own life. I know I will. I also leave you with Dr. Michael Marmot’s seminal post on income and health titled “The Influence Of Income On Health: Views Of An Epidemiologist“, should you need additional convincing that money matters indeed matter for health outcomes.
The Influence Of Income On Health: Views Of An Epidemiologist
Income is related to health in three ways: through the gross national product of countries, the income of individuals, and the income inequalities among rich nations and among geographic areas. A central question is the degree to which these associations reflect a causal association. If so, redistribution of income would improve health. This paper discusses two ways in which income could be causally related to health: through a direct effect on the material conditions necessary for biological survival, and through an effect on social participation and opportunity to control life circumstances. The fewer goods and services are provided publicly by the community, the more important individual income is for health. Under present U.S. circumstances, a policy of counteracting growing income inequalities through the tax and benefit system and of public provision appears justified.