The coronavirus outbreak is causing a lot of economic disruption to finances across the country.
It's also causing an enormous amount of casualties in Europe and the US. There are two different battles going on right now. A healthcare one and an economic one. On the healthcare side of things all we can do is follow the restrictions, make sure we stay safe and do things like washing our hands regularly.
There's a lot more we can do on the economic side of things. Here are some of the best ways to stay financially strong during this uncertain time:
Don't panic sell your shares
The worst time to sell your shares is after a market crash. Selling would permanently wipe out your wealth, rather than it simply being an on-paper temporary decline. The Wesfarmers Ltd (ASX: WES) share price declined from $30 just before the GFC to a low of under $12 by early 2009. A fall of 60%. By the end of 2009 it had risen back to $23 – recovering more than half of the lost value. If you bought at $12 you'd have made almost 100% in less than a year.
Some businesses are going to face very difficult times this year. But some are just seeing their share prices lower because investors aren't as confident about the long-term future.
I think it's a bad idea to 'sell low'. To me, it's actually a good idea to buy during times like this.
Access the help being offered
The government is now offering a number of different initiatives to help people through. If you're an employee or sole trader who's in a business which is suffering you can probably access the 'Jobkeeper' payment of $1,500 a fortnight.
An expanded Jobseeker is also available for the people that aren't eligible for the Jobkeeper. Eligible people are also entitled to the fortnightly $550 coronavirus supplement as well as all the other Centrelink options that are there like rental assistance.
The government assistance may not be enough to replace your entire income. But it could be enough to get you through the next six months without having to take drastic action.
One of those 'drastic actions' could be utilising the $10,000 early release of superannuation. It's not advisable to do this because you'd be asking your super fund to sell your super assets at low prices and taking away from your future retirement. But if you need the money to avoid doing something like selling your house, then it may be worth thinking about.
Limit spending where possible
The more we can limit our spending during this period the easier we'll find to get through it financially.
Bulk meals, vegetables, low-cost entertainment, asking your bank for payment relief if needed, do some online searching to make sure your utilities are on a low cost plan, ask for utility relief if you need to – there are plenty of ways to reduce your monthly cashflow for the short-term.
You just need to do what it takes to get through this period so your finances are strong enough on the other side when your income goes back to normal.
Foolish takeaway
The most important thing during this crisis is you and your family – stay safe. On the financial side of things there's plenty we can do to make our finances and budgets as efficient as possible. We're doing the best we can in our household and I hope you can too.
