The intricacies of making the most of your money can be complicated, but according to just about any expert you ask, the basics of personal finance are dead simple. Have a budget. Spend less than you earn. Automate things so you save without having to do anything every month. Pay down high interest debt first. Build up an emergency fund.
We've all heard this kind of sensible, straightforward advice before. But the same experts who usually dish it out are now saying that, thanks to the pandemic, you may want to ignore most of it.
"Cash is king in a crisis."
With the Covid crisis rolling into its seventh month, the economy sputtering, and many of us feeling insecure about our income, these aren't normal times. So when Apartment Therapy recently interviewed personal finance experts, they agreed that now may be the time to put your long-term goals on the back burner and focus on short-term cash flow.
"Typically, we like to see people mercilessly pummel away at their debts once they're sitting on more than a month or two's worth of expenses in cash," said Julia Lorenz-Olson, co-host of the PBS show, Two Cents.
Instead, right now, hold on to every penny you can. "Cash is king in a crisis--the more you have, the more options [are] available to you," according to Olson. "Any extra money you might receive from a stimulus check or a surprise windfall, keep it in cash."
Personal finance gurus generally hate credit cards, but 2020 is making them reconsider the role plastic should play in your life. Famed credit card foe Suze Orman, for instance, has long insisted you should use cards only if you pay off your balance in full each month. But a few months back, she told Business Insider the current crisis has shifted her thinking.
"You need to be keeping every penny that you have," Orman said. "And what that means is, if you have available credit limit on your credit cards, I personally would be charging everything I could on my credit cards, keeping the cash that I have absolutely safe and sound, and paying the minimum payment due on my credit cards when the bills come in."
The Apartment Therapy experts agree, even if running up your balance is going to impact your credit score. "Will you likely be moving and need a good credit score?" asked Wendy Barlin, CEO of About Profit. "If not, then don't worry about your credit score right now."
Don't be a slave to your budget.
The bottom line advice from all the experts is that we're living in extraordinary times, and if that means you have to throw your usual budget and savings plans out the window, don't beat yourself up. Obviously you should still try to be as sensible with your money as possible, but right now isn't the time to be rigid about your personal finances.
"During a time where fear is natural, it is more vital than ever to not fall trap to fear-based decisions," cautions National Urban League CFO Clavin Harris. "Be prepared to be flexible on spending, savings and investing, but focus on the long-term."
The last thing you need to add to your current stress and anxiety is unnecessary guilt about your money.