9 Smart Money Moves to Make Amid the Coronavirus Pandemic

As COVID-19 has spread from China to Seattle, with outbreaks in more than 150 countries and territories in between, the coronavirus pandemic is now not only a public health crisis, but an economic one as well. Even if you never get sick, your wallet will undoubtedly suffer.

In fact, it is already likely feeling some pain. The only questions are to what degree and how much worse it will get.

People saving for retirement and other long-term goals, for instance, have seen the value of stocks in their 401(k)s and IRAs drop by nearly 30 percent on average in a matter of weeks. Anyone who works for an airline, hotel, restaurant, sports arena or movie theater (especially if they're shift workers) or who runs a local small business has probably already taken a serious income hit, as consumers stop consuming and public life is curtailed at the urging of government officials and medical experts. Meanwhile, the list of conferences and events postponed or cancelled and business plans reined in or shelved grows daily.

Despite the Federal Reserve's efforts to keep pumping money into the economy to keep it afloat and the $1 trillion stimulus package being planned in Washington, recession at this point seems inevitable, say economists from Goldman Sachs, JP Morgan Chase, Morgan Stanley and many others. Early indicators are already starting to trickle in: Retail sales fell the most in a year in February and jobless claims were expected to jump in mid-March, even before the full force of coronavirus containment measures began rippling through the economy.

It's never a good idea to panic, but it's certainly reasonable to be worried about the possible impact of the pandemic on your financial health as well as your physical well-being—and to prepare as much as you can for what lies ahead. Here's what you need to know and do now.

closed restaurant california coronavirus
A pedestrian walks by a closed sign on the door of a restaurant on March 17, 2020 in San Francisco, California. Seven San Francisco Bay Area counties have ordered residents to shelter in place in an effort to reduce social interaction and slow the spread of COVID-19. Justin Sullivan/Getty

SHORE UP YOUR FINANCES

Financial advisers and experts, with the help of tweets, charts, and screeds, have reminded anyone and all who'll listen to avoid checking your 401(k) as the S&P 500 turns into a falling knife and to avoid changing your investing plan simply because stocks are down sharply. That is good advice: It's nearly impossible to correctly time buying and selling stocks and studies show that those who try it typically end up making far less in the long run and possibly even losing money.

But even if you turn off CNBC and resist the temptation to check your investment account balance, market downturns get harder to ignore when they look like they'll be followed by recession, high unemployment and stress on your personal bottom line.

The most vulnerable—often believed to be young people about to graduate and launch their careers and older people on the verge of retirement—may not be limited to who you think they are. A recent paper from the Center for Retirement Research at Boston College found that the youngest boomers (those currently between the ages of 55 and 60) have much less saved in their 401(k)s and IRAs than older boomers in large part because many lost their jobs during the 2008 financial crisis and were only able to find lower-paying work when they re-entered the workforce. That is, in their forties, as the youngest boomers were moving into what was supposed to be their peak-earning years, they lost momentum and weren't able to recover, even though an historic economic expansion and stock market boom followed the Great Recession.

In other words, almost everyone, unfortunately, has something to worry about in the current economy. Here's how to kick off your financial contingency plan.

Pump up your emergency fund. The ideal time to get aggressive about pumping up your emergency fund is when you know you could soon be facing an actual emergency. Like now. Financial experts recommend keeping three to six months' worth of essential expenses in a savings account for a reason: You don't want to fall into debt if you lose your job, especially when you may not have income coming in for a while to pay down those bills.

Here's a simple stress test to see if you have enough socked away for that proverbial rainy day, which, in this case, could be a monsoon. Look over your credit card and bank statements to see how much you typically spend in a month on necessary stuff (housing, food, insurance) and then divide that by the amount in your savings account. If the resulting figure is less than three, you're underfunded.

One way to beef up emergency savings quickly is to repurpose forgone spending. If you're working from home for the foreseeable future, redirect some of the money you're saving on commuting costs, lunch, dry cleaning and happy hour toward your rainy-day fund. Likewise, for savings on restaurant meals, movies and concerts, sporting events and all the other leisure activities that most people won't be indulging in for the duration of the pandemic.

Another possible source of a quick infusion of cash: your taxes. According to the IRS, 73 percent of taxpayers, or about 96 million Americans, got a refund on their 2018 return, averaging $2,869. If you haven't filed or received your virtual check yet, it's especially important this year to earmark all or most of this money for savings.

Lower your debt overhang. Likewise, you'll want to pay down credit card debt while you still have a regular paycheck coming in. Carrying a balance is never ideal, but sometimes cash-strapped families have to bite the bullet—and that could be you if you or your spouse is furloughed without pay or laid off. Keep your credit limit unclogged in case you need it.

Use a card with a long zero-percent financing period (15 months or more, ideally) to pay down credit card debt, which has been rising recently. Or if you have debt on two different cards, consider paying off the one with the smallest balance first, regardless of the interest rate. Research has shown that this "small victories" approach can keep you motivated.

Work on You, Inc. Washington D.C.-based financial planner Kevin Mahoney recommends using this economic scare as an impetus to earn a professional certification or take a continuing education class that will help make you less reliant on your salary as someone else's employee. Most of these programs have online options—or, if they didn't before, they're likely to be offering virtual classes very soon.

"Develop the skills and build the network necessary to generate income independently," said Mahoney. This is easier said than done, he acknowledges, but having a way to make money other than relying on your employer may reduce your "fears of being laid off during a recession."

Ramp up long-term savings. No one knows how long the current carnage in the stock market will go on but prices will eventually rebound and then grow again: There's never been a 15-year period since 1926 when stocks have lost money and typically over long periods they've trounced the competition, according to Ibbotson Associates. Still, as the youngest boomers are learning now, even a long period of rising stock prices may not be enough to seed a comfortable retirement if you weren't able to save enough in the early and middle parts of your career, allowing your investment earnings to compound and grow over a period of many years.

That's why it's imperative to try to set aside more money now, while you still have a job and income coming in and are probably spending less so may have more room in your budget to save. The best way to do this is to automate: Raise your 401(k) contribution rate by a percentage point or two or sign up with your employer or a financial services company to have a set amount shifted from your paycheck or checking account to an IRA every time you get paid.

Saving via these retirement plans comes with something of a safety net—although one you shouldn't use unless absolutely necessary. If you run into financial trouble and need to tap your account early to help pay bills, you can usually borrow against your 401(k) if you're still employed or withdraw funds if you're not. Although taking money out before you turn 59 ½ (age 55, if you've lost your job) typically means paying a 10 percent early withdrawal penalty, that fee may be waived in some limited circumstances for "hardship," such as high medical bills—a scenario that's unfortunately more likely now in the COVID-19 era than it was just a few week ago.

GET HELP, WHERE YOU CAN

Sometimes, even in the worst of times, there are opportunities—and assistance when you need it the most. Here's how to take advantage of what's available now.

Refinance your mortgage. The one genuinely positive development to come out of the current crisis for homeowners: record-low mortgage rates. The average rate on a 30-year fixed-rate mortgage recently dropped to 3.29 percent, according to Freddie Mac, compared to a high of 4.85 percent as recently as November 2018.

"If you've been thinking about refinancing, there has never been a better time," says Jimmy Lee, chief executive of Las Vegas-based The Wealth Consulting Group.

The savings can be substantial, as long as you're going to stay in your home long enough to recoup the closing costs on a new loan (typically two to three years). For instance, you could save $1,500 a year if you cut a full percentage point off your current $300,000 mortgage with a 4.5 percent rate and 15 years remaining on loan. You'd recoup the estimated 2 percent you'd pay in closing costs in 40 months.

Lee recommends looking into refinancing if you can shave at least half a percentage point off your borrowing. To see if the numbers add up for you, there are plenty of online tools that can help, such as Discover.com's Mortgage Refinance Calculator.

Nabbing one of those record-low rates to buy a new home now is a riskier proposition. For most prospective buyers, the best time to commit to a new mortgage is not when the economy is in flux and your job could be at risk.

If you have a choice, sellers probably ought to put off a planned move too, given an anticipated softening of the housing market. Already, the National Association of Realtors expects a 10 percent decline in home sales next month compared to estimates before the pandemic. And a flash poll of their members found that about 20 percent said that buyer interest in California and Washington (two places that have been especially hard-hit by the coronavirus) has either decreased or decreased significantly.

Get relief from your bills. Some 67 million American anticipate having trouble paying their credit card bills as a result of the coronavirus, according to a WalletHub survey. Fortunately, at least some issuers seem prepared to give a helping hand. Goldman Sachs/Apple has said it will allow cardholders to skip their next payment without accruing interest, if needed. Many other providers, including American Express, Capital One and Wells Fargo, have indicated their willingness to work with customers who are struggling financially as well.

Many broadband and phone service providers have also committed to retaining service for customers who can't pay their bills for the next two months, according to the Federal Communication Commission. Among them: AT&T, Comcast, Earthlink, Sprint, T-Mobile and Verizon. The full list of companies is on the FCC website.

Take a hand from Uncle Sam. Even the Internal Revenue Service is offering some relief. In mid-March the IRS announced that taxpayers who owe money on their 2019 returns will get a 90-day reprieve on payment, if needed, without incurring any interest or penalties. You now will also have until July 15 to file your return; if you still need more time, you can get an extension on filing until October 15 but would need to pay any taxes due.

States are likely to follow the IRS lead and some, like California and Connecticut have already extended their filing deadlines. The American Institute of Certified Public Accountants (AICPA) keeps an up-to-date list of state tax-filing guidelines related to the coronavirus on its website.

GET OFF THE HOOK FOR TRAVEL

Some 94 million Americans have cancelled or plan to cancel vacation and other travel plans because of the pandemic, WalletHub reports. Even without the various travel bans in effect by the U.S. and other countries, you probably won't want to travel anytime soon given the health risks and it could be months before it feels safe to plan a vacation again.

Here's how to make sure you don't lose money on travel plans that may be upended, either trips already booked or vacations you may want to take at a future date.

Go to the source. If you're looking to cancel a flight, don't count on getting a refund via the travel insurance included with your airline credit card. Even the most premium travel cards don't cover your disinclination to travel due to an epidemic or pandemic, however serious the situation is. The exception: If you're actually infected with COVID-19, the coverage would kick in.

The better bet is to contact your carrier directly. Many airlines, including American, Delta and United, have waived all change fees for tickets booked between March 1 and March 31, and for flights scheduled to depart until April 30. You can change your flight (although you may have to pay the difference in fare), or cancel it and put the value of the old ticket toward a new one. (You'll have about a year to use the voucher.) Don't expect a cash refund, though, and be sure to check with the airline for its latest policy, as terms and dates are highly subject to change given the rapid developments and fluidity of the pandemic.

Hotel cancellations should be easier. "Hotel bookings are typically the most flexible type of travel to cancel, with or without insurance, and most chains provide a 24- to 48-hour cancellation policy," says debt attorney Leslie Tayne. "If you booked travel through Airbnb, COVID-19 falls under the company's extenuating circumstances policy, so if your reservation is located in an area with a World Health Organization travel warning, you are likely to receive a full refund if you cancel your booking."

Pay for protection. If you do want to take a chance on booking travel later in the year when the pandemic may be behind us, it is worth shelling out some extra bucks for travel insurance that will let you cancel your trip for any reason—just in case the crisis takes longer than you think to be resolved. You'll likely need to buy the add-on coverage at least 21 days before your first trip payment is due, and it covers 75 percent of the total trip cost.

The policy will be more expensive than more standard travel insurance with restrictions but, given the current unpredictable and risky circumstances, it's likely money well spent. How much more will you pay? A recent quote for a $6,000 vacation for two adults in August from Travelex Select, which allows you to cancel for any reason, came in at almost $350, about $100 more than Travelex Basic, which doesn't offer the extra coverage.

Or, perhaps better yet, simply wait to travel until COVID-19 is a terrible and distant memory rather than our current, harsh reality.

Missing out on a vacation is a drag. But you can make the most of a bad situation by putting all the money you set aside for travel into a savings account that will help see you through the tough economic times ahead. These days, that's a real win.

Taylor Tepper is a senior writer at Wirecutter Money and a former staff writer at Money magazine. His work has additionally been published in Fortune, NPR and Bloomberg. You can find him on LinkedIn, Twitter, and Instagram.

9 Smart Money Moves to Make Amid the Coronavirus Pandemic