With COVID-19 dominating the headlines, the virus and its impacts have gone global.

Although outbreaks appear to have slowed in China, infections have mounted in Europe, South Korea, The United States, Iran and elsewhere, with authorities implementing restrictive measures to contain the virus.

Schools, public venues, tourist attractions and workplaces have closed their doors to stop the spread of the virus. Voluntary or mandatory quarantine and self-isolation measures are keeping more people at home – either working remotely or not at all.

All these containment measures are wise in the interest of people’s health, but what about people’s bank accounts? 

Experts are predicting the virus could end up costing the global economy more than $1.1 trillion dollars – a number that’s unfathomable.

The Centre for Strategic & International Studies reports that apart from manufacturing and trade, the travel, tourism and entertainment industries will be hit the hardest:

The International Air Transport Association warns that COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020, and the international film market could lose over $5 billion in lower box office sales.

Similarly, shares of major hotel companies have plummeted in the last few weeks, and entertainment giants like Disney expect a significant blow to revenues. Restaurants, sporting events, and other services will also face significant disruption.

Even if you aren’t diagnosed with the illness, you could be financially impacted by the fallout. And, in times like these, your financial health can be just as critical.

With a solid understanding of your finances, you’ll be better prepared for whatever comes your way in the weeks and months ahead.

So, what can you do now to financially prepare yourself for the costs of COVID-19? Here’s a few tips on how you can keep your financial health in check as the situation develops around the world.

Prioritize Your Purchases

Before you run to the store to stock up on canned goods, toilet paper and Lysol wipes, take inventory of what you already have at home. Personally, I’m guilty of having enough toilet paper to last about 6 months thanks to a Costco run just before the madness broke out.

With that, don’t go out of your way to stock your pantry shelves “just in case.” Take an inventory and be realistic. Only buy what you and your family will need at home for the next 1 or 2 months.

The goal here is to avoid unnecessary spending. First, you’ll eat into your budget and second, you may be taking supplies away from someone who needs it more than you do.

If you do have an emergency fund avoid cracking into it to buy supplies. If you already have enough toilet paper in the bathroom or meat in the freezer, consider holding off. Your wallet and local community will thank you.

Stretch Your Savings

The current situation may require you to stay home for weeks. For full time employees that could simply mean working remotely. If you’re self-employed or a part of the gig economy, it could mean no work at all.

If you’re in the hospitality, travel, tourism or entertainment industry, you may face massive layoffs. Anyone can be impacted by COVID-19 and everyone is at risk of losing employment during this time.

Instead of panicking, think about how you can stretch your savings. The most effective way is to cut all non-essential spending from your budget.

Create a new budget for this unique situation. Be more frugal and prioritize spending based on what you need to keep a roof over your head and food in your belly.

Boost Your Emergency Fund

If you’re still working and receiving a full income, consider boosting your emergency fund. It’s easier to resist spending over the next few weeks as most of us are at home anyways.

Money you would’ve spent on entertainment, transportation, dining out, clothing or impulse buys are funds that can be added to your savings account.

Since we’re living in a time of financial insecurity, boosting your emergency fund can be just what you need to hold you off in the future

Consider Taking Advantage Of Low Interest Rates

As the feeling of uncertainty takes hold around the world, interest rates are dropping. If you’re planning to secure a mortgage within the next 4-6 months, then you can likely take advantage of extremely low rates for all kinds of borrowing.

Based on the current state of the economy, it’s safe to say that the rate you get today will not be the same rate that’s available in a few months. Use the volatile market to your advantage by locking in a guaranteed rate now to avoid a rate increase in the future.

If you have outstanding debt such as a mortgage or student loans or, you’d like to use some of your home equity as a safety net, now is the time to refinance. You could potentially save thousands over the course of your loan. Everything Mortgages can help you look for suitable refi options.

Keep Calm And Contact Your Lenders

If the impacts of this virus have affected your income, then you may have trouble keeping up with your bills. Without an emergency fund, you could find yourself in dire straits quickly.

Although it can be scary, make sure to approach the situation with a clear head. Instead of allowing late payments to damage your credit score for years, reach out to your lenders and landlord. Contact them as soon as you realize that you’ll be unable to make an on-time payment.

You might be surprised, but lenders may be willing to work with you throughout this difficult time. Most lenders will go out of their way to help you successfully navigate this difficult financial time, especially if you’ve consistently made on-time payments in the past.

The Bottom Line

The world is on edge due to the COVID-19 situation, but that doesn’t mean your finances need to suffer. Take action to build your emergency fund before the virus impacts you in any way. If you have already been affected by the virus, then take steps to mitigate the long-term financial damage.

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