This is a continuation of Thursday’s post about living in the paradox of this pandemic. Looking at the general psychological effects of the pandemic is important. But given that this is at least ostensibly a blog about money, I should also explore the impact on people’s financial coping ability.
Because when you’re this frazzled, how do you even start to keep up on personal finance? The short answer: It depends. (Because why would anything be simple these days?)
For me, fixating on concrete numbers in a spreadsheet and seeing definitive progress soothes me. It makes me feel as though at least something in this world is on track.
I think a fair number of other people fall into this category, too. In a world where we’re hearing conflicting “facts” about candidates and new scientific findings about the virus causing this pandemic — some of which may contradict earlier findings/beliefs — firm numbers and basic math may start to feel like the only things that we can… if not control then at least enjoy the immutableness of.
And it’s important to feel like you have something to hold onto when it feels like the world has turned upside down.
A different reaction
That said, for many tracking their money may be too much. As long as they’re making more than they’re spending, they just can’t bring themselves to scrutinize the situation further.
And while I hope they realized that they’re in a supremely privileged position to be able to ignore the smaller details, they also need to know that it’s a perfectly fine — even understandable — attitude in the midst of, well, *gestures broadly at the world.*
So it’s okay if you can’t handle the minutiae of spreadsheets (or even software like Mint) — at least, as long as you know definitively that you’re bringing in as much or more than you’re spending. And that can be determined pretty simply by spending only cash or or using only debit and making sure there’s a still surplus (or at least no overdrafts) at the end of the pay period.
But having a surplus brings its own problems, I suppose. Specifically, many of us have had our spending change.
Yes, we’re saving on gas and probably dining in restaurants, but as I mentioned in the last post, the innumerable days until this is over yawn before us, empty except for work and any family obligations. Yet they’re also fraught with anxiety — for our own health, our loved ones’ health, our job security, market volatility and, of course, keeping any kids entertained/schooled.
So we may find ourselves spending more in certain areas of the budget — whether out of boredom or anxiousness — or just to keep the kids entertained.
Someone I follow on Twitter invested quite a bit in inflatable toys for the kids, including (I believe) a full-on bouncy house. Yes, they were saving money from the cost of the kids’ normal summer activities, but the expense was definitely larger than the usual outlays. Still, for kids who were housebound and unable to see friends, the person felt it was money well-spent.
Other people might plunk down on some cash on grills or pricey kitchen items now that so many meals have to be done at home. Now that they’re stuck in the house, I know a lot of people have tackled home improvement projects or redecorated.
Other folks may spend more on, say, takeout or junk food as they try to use emotional eating to calm anxiety. (Not that I know anyone who would do this, cough cough.) Or maybe on books to lose themselves in. Or perhaps they’re buying more video games than usual.
Or — as a totally random example and definitely not anything I’d do — someone might spend (what seems to an outside observer like) too much money on makeup because the pretty colors made her happy.
So even as we may fret about money and our financial futures, I think a lot of us may also be spending more on what, on the face of it, seem like non-necessities. But that may be necessary for our sanity.
And that’s yet more reason that monitoring finances becomes more difficult and potentially more stressful.
A different situation
But of course, many people are in a very different position as their hours are cut or eliminated altogether and they’re facing unemployment running out without a hint of a second stimulus check or another bonus for unemployment benefits.
That will obviously affect not just their finances, but also how much they monitor their money. And honestly, I’m divided on what that looks like.
People who are struggling will obviously have to buckle down and zero in on how to cover all of their bills (or worse, maybe which ones they can manage skip for the month in order to cover more pressing ones).
Which in a weird way could make it easier for them to force themselves to stay on top of their money. To be clear, “easier” is not remotely the same as “better” let alone “good.” But the situation does force them to be aware of their finances. Unfortunately, it’s more of a painful, stress- and anxiety-inducing awareness.
In short, if almost every decision comes down to money, they can’t ignore your finances. Which is an absolutely exhausting way to live, but I guess at least no one can accuse them of hiding from their financial reality.
Worry = avoidance?
Or perhaps I have it wrong and the stress of barely (or not) being able to cover all of their bills makes them more avoidant of the finer financial details.
While obviously problematic, I think this is completely understandable from a psychological point of view.
Their surge capacity, mental bandwidth or coping skills — whatever you want to call it — are likely depleted. So they may simply not have it in them to keep up with the constant juggling act and to endlessly make hard decisions — or to think too hard about how much they’re charging to credit cards just to stay afloat.
Different strokes for different folks
There may be other camps that I’m not thinking of, but for now my guess is that most people will fall into one of those four camps. A lot of it will depend on things like any pre-existing depression/anxiety, how much their cities are reopening (thus jobs coming back — for better or worse), how seriously they take the virus, etc.
And okay, in a perfect world everyone would keep up on their finances no matter what. But even pre-pandemic this was not a perfect world. Now it’s… I don’t even have the vocabulary to cover it.
So I think we need to avoid shaming suboptimal behavior in all of this craziness.
Of course, that’s not a pass altogether. Obviously, if your avoidance to finances is actively making them worse, you need to take steps to get on track.
But do at least know that your impulses are incredibly understandable. And that a lot of people are in the same psychological boat.
Small steps toward taking control
Coping skills can’t just be created all at once, so if you’re having a hard time keeping up with your finances, break them down into bite-sized pieces.
For example, first look at just a few expenses, like the literal basics — rent, utilities and food — and compare those to your income. That’s enough for one day.
If you can’t even cover those, your first step is to call 211 or go to 211.org. That organization knows of a wealth of resources that may help you cover them.
The next day add in your car payment and another expense or two.
On a separate day, contend with health care costs. By which I mean, don’t just compute them. If you are currently without coverage or on COBRA, set aside 15 minutes to go to healthcare.gov and apply for a marketplace plan. The application will also tell you whether you are eligible for Medicaid and, if so, direct you where to apply.
(Even if you’ve been unemployed for a while, you may qualify for a special enrollment period if your income dropped recently, if it made you eligible for more savings. And arguably, people on unemployment were getting a bonus through early September, which means their income dropped after that.)
Just slowly add things to the list, deducting them from income, until you have a full layout of your situation.
If you don’t want to go through your budget line by line, set a timer for 10-15 minutes and lay out your income and expenses until the timer goes off. Repeat for a few days until everything is accounted for. Sometimes knowing you’re dipping a toe in the water, not jumping into the deep end, can make it easier to get started.
Or perhaps it’s just a matter of making yourself sit down and deal with everything all at once. So bribe yourself. Tell yourself that as soon as you’re done this, you’ll take a long bath or bury yourself in a book or some TV for a while — whatever escape you’ll need.
Generally, rent is one of your few truly fixed expenses.
For example, if you have a high car payment, now may be a good time to see if the bank will refinance the car loan. If you’re unemployed, this might be a hard sell, so hint that you’re having trouble making payments. If they think they’ll have to repossess the vehicle, they may be more amenable to working with you.
If you have credit card debt, call now and ask for a lower interest rate. From what I hear, card companies are trying to accommodate a lot of customers to avoid mass defaults.
And as for ways to trim the rest of your expenses… Well, you have the entire Internet at your fingertips. So do a search for “frugal” or “save on” and then the expense in question. (But for sanity’s sake, just look up one or two subjects at a time. You don’t want to burn out.)
As a reminder, here are some ways to save on utilities, ways I would trim down spending to my emergency budget and some tips on, um, well the gamut of expenses. (That last one is a long post, so use Ctrl + F to find the specific expense you’re looking to trim.)
But those posts are hardly exhaustive, so go and search the Internet.
Shameless nepotism: My mom (who, for those of you who are newer, used to write MSN Money’s frugality blog) has written plenty of frugality tips too, so you can go there and search her old posts.
If you’re willing to invest a little money in learning how to save, check out her book Your Playbook for Tough Times. Also here’s a link to a free chapter she gives out, and it contains 30 ways for what she calls “stealth savings.”
Plus this is yet another reminder for anyone who is struggling to call 211 or go to 211.org. They may know of resources to help. Also, use the Feeding America website to find food banks in your area. (And for those of you still doing well financially, don’t forget that even a $10 donation to Feeding America will mean 100 meals. #justsayin)
Finally, I’ll just once again remind you that very few (if any) people are feeling okay right now. So don’t feel bad for feeling like you’re floundering — emotionally or financially.
How has your financial coping ability been affected by the pandemic?