With widespread layoffs, furloughs, pay cuts and hiring freezes many people are struggling financially. Sallie Krawcheck, the CEO and cofounder of the digital investment platform for women Ellevest, shares her advice for managing your money during the pandemic.
“Uncertainty is even more stressful than the certainty of pain. Get clear on where you stand financially, and make that plan. That’s financial self-care,” says Krawcheck. “Job loss and money hardships can be a big blow to the ego. The world is in upheaval. We are not in normal times. Be kind to yourself. This is not your fault, and you are not alone,” she adds. This advice can help you feel more in control of your finances throughout an economic downturn.
Elana Lyn Gross: What are your top three personal finance tips for navigating the pandemic?
Sallie Krawcheck: My biggest tip: Be clear on where you stand financially right now. Go through your spending and saving and understand all your possible sources of income. Things are changing quickly. The best way to deal with uncertainty is to have a plan.
The Federal Reserve recently lowered interest rates to 0%. When interest rates go down, it’s a great opportunity to consider refinancing your debt at a lower interest rate to save money.
Look at your “fixed costs,” things you have to pay for every month. Things like your cell phone, internet and insurance. Call and see if you can get a deal. Lowering those monthly costs can really help, and lots of companies are willing to work with you right now because of the pandemic.
And I’ll throw in a fourth: If you have a question — any question — about money, email us at questions@ellevest.com. We are personally answering every one.
Gross: What are the first steps someone should take if she gets laid off or furloughed?
Krawcheck: The most important thing: Be gentle with yourself. We are going through a large-scale crisis. And combined with fears for our health? That’s a lot to cope with. It’s okay to be emotional.
Meanwhile, some paperwork. You’ll need to file for unemployment — the stimulus package extends benefits, but you can expect delays with so many people filing. You’ll also need to review your health insurance options — in a pandemic, that’s important. That could be a partner’s plan, Obamacare, Medicaid if you’re eligible, or you might pay to extend your current coverage through a COBRA plan. Jump on those right away.
Next, take a financial inventory. What are all your sources of income right now — unemployment, other family members, any savings, a stimulus check? What are you spending on now, and where can you cut back? Do you qualify for any assistance? Can you explore going into debt to make ends meet?
Finally, the job search. With business on pause, it’s going to be slow. Not nonexistent, but slow. Get into a routine where you’re getting up, showering, eating at the same time, then work in time to work on the career stuff. Update your resume and LinkedIn. Research companies and fields you may want to work for. Practice interviewing — now’s a great time to practice virtually with friends. And network! Everyone’s longing for connection right now. Do it. Connect with people you know. Connect with people you don’t know, but want to. I always say that networking is the #1 unwritten career tool. Use it.
Gross: What would you recommend someone do to readjust her budget if she finds that she has to take a significant pay cut?
Krawcheck: First, go through those fixed costs and see what you can negotiate. Then go through your remaining expenses and label them essential, cut back, pause or cancel. Be really honest with yourself about what you need and what you don’t. For essentials like groceries, meal planning can save a lot.
If you’ve cut back all you can, then it’s time to look at emergency moves. You can look into government benefits — recent legislation added money to them and relaxed their requirements. You can also request forbearance or deferment on your student loans and mortgage. (If your loans are federally backed, the stimulus package made it easier to do that. If not, call and ask your provider if they’re providing similar help.) And try to negotiate with any loan provider or credit card company — they’d rather work with you than have you stop paying altogether.
Gross: Do you have any tips for making money during the pandemic if someone has lost her job?
Krawcheck: Look at what people need right now: virtual tutoring, online learning, virtual assistants and customer service. And then there are essential jobs providing food and services — they come with an increased health risk, but they’re an option if you need to. Think about how you can reframe your experience to positions that are hiring now.
Gross: Money has always been one of people’s highest stressors. Do you have any tips for decreasing financial stress right now?
Krawcheck: Uncertainty is even more stressful than the certainty of pain. Get clear on where you stand financially, and make that plan. That’s financial self-care.
Other kinds of self-care are helpful, too. Connect with people. Keep your mind occupied. Bake that bread, if it helps. Stay moving — take that daily walk or run or yoga or whatever you can do.
Job loss and money hardships can be a big blow to the ego. The world is in upheaval. We are not in normal times. Be kind to yourself. This is not your fault, and you are not alone.
Gross: If someone chooses to invest during this time, are there tips you recommend?
Krawcheck: The stock market lately — yeesh. The ups and downs have never been so fast. Investors hate uncertainty. And as long as we don’t know what’s going to happen next with this pandemic, we can expect these ups and downs to continue. So here’s what I think we should focus on.
If you can’t afford to invest right now, don’t. Press pause on your contributions and focus on this emergency. You have my permission.
If you can, here’s some perspective: People tend to remember painful things more than we do good things. We remember the dramatic downturns. But historically, over the long-term, the markets have gone up. We’ve recovered from every downturn we’ve had. Some years are great (like last year) and some years are terrible (like this year). But since 1928, the average annual return in the stock market has been 9.7%.
So invest for the long-term. Keep going, and give time the chance to do its thing. As you get closer to your goal, your investment portfolio should be managed to get more conservative, with fewer stocks and more lower-risk investments like bonds.
I originally wrote this post for Forbes.
