Your coronavirus money questions, answered

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

Managing Editor & Certified Financial Planner™

Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

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These are uncertain times — and you may have questions, especially on how the coronavirus crisis will affect your wallet, both today and in the future. We’re here to help. Here’s everything you need to know about your money and the coronavirus.

The coronavirus crisis doesn’t seem like it’s going away anytime soon. Is there anything I can do right now to make sure I’m financially prepared?

First, evaluate whether your money goals still make sense during the crisis. Redraft your budget to reflect any changes — or anticipated changes — to your income and, if you haven’t already, begin shoring up your emergency fund.

A common rule of thumb is having three to six months’ worth of expenses saved — but that may no longer be enough. To set your nest egg goal, recalculate all essential expenses under pandemic conditions — think food, rent, bills, transportation and other necessities — and multiply by the number of months you want to save. Keep in mind that number is flexible and based on your financial needs. The key is to strive for enough to cover unexpected emergencies, but not to neglect other priorities.

Above all else, remember there’s only so much you can do during a pandemic — and remember to wash your hands.

How can I cut costs during the crisis? What changes (if any) should I make?

It’s a smart idea to retool your budget in times of financial uncertainty. First, take a hard look at your subscriptions, including gym memberships, streaming services and meal kits. Consider canceling ones you don’t regularly use. Don’t know where to start? This old-school budgeting spreadsheet can help you visualize, revise and track your expenses, including your savings goals.

What about my investments?

It’s understandable to worry about your investments when the stock market is a roller coaster. However, it’s important for investors not to be rash and pull everything out of the stock market. The best advice is to stay the course. Check out how five financial professionals are managing their personal portfolios in response to the crisis.

Is my money safe in a bank?

Your money is much safer in a bank than it is under your mattress. The Federal Deposit Insurance Corporation covers up to $250,000 in each bank account, which means your money is fully protected by the U.S. government if your bank fails. This includes checking accounts, savings accounts, money market accounts and certificates of deposit. Some bank branches may have temporarily closed or limited service, but you can still access your money online or via an ATM.

Will my health insurance cover coronavirus?

Your plan will likely cover testing for the virus if you have health insurance. The U.S. government’s coronavirus relief bill requires the insurance industry to provide no-deductible coverage for testing, emergency room care and for future vaccines. Some major insurers, including Medicare and Medicaid, have waived patient cost-sharing for all coronavirus treatment costs, and most have waived it for coronavirus testing. Even if you don’t qualify for Medicaid on your own, your children may qualify for CHIP, which provides low-cost insurance to children whose families make too much to qualify for Medicaid. Learn more about eligibility here.

What about my mortgage? Is there a way to suspend monthly payments?

The coronavirus aid bill allows homeowners with federally backed mortgages who have experienced financial hardship to reduce payments or pause payment altogether for up to 180 days. You can also request an additional 180 days, depending on your financial situation. To qualify, contact your loan servicer. But be aware: Many loan servicers are experiencing high volume and may not get back to you immediately.

Should I refinance my mortgage?

Mortgage rates are very low right now. Some homeowners can take advantage by refinancing, which means taking out a new mortgage loan with lower rates and monthly payments in place of your old one. Though refinancing comes with fees, it can be worthwhile if rates are low enough. Before you contact your mortgage lender, consider your financial situation and long-term money goals. We have a guide to refinancing your mortgage here.

An important note: Refinancing is more difficult now that many county records offices, which help you obtain title searches and deed filings, are closed. It’s also especially difficult for those recently unemployed, as income is needed to qualify for a mortgage.

Will coronavirus affect my home insurance premiums?

Since your home can’t catch the coronavirus, your home insurance premiums won’t be affected too much. But if you’re working from home, it could make sense to get liability coverage or a home business endorsement for your policy. Personal liability coverage covers your legal bills if you or someone in your family (including your pet) causes injury or damage to someone else’s property. As families remain close to home, the likelihood of accidents increases, which makes it essential to have proper coverage. In addition, a home business endorsement covers your work-from-home equipment from damage or theft (standard homeowners insurance coverage is typically not enough).

Also, if you own a rental property that isn’t getting used during the lockdown, consider pausing any additional coverage for that property. If you’re worried about not making your home insurance payments, contact your insurer. Some are offering flexible payment options due to financial hardship.

What about my car insurance premiums?

Your car insurance premiums may change during the coronavirus outbreak. For example, your insurer may lower your rates or offer paybacks on a percentage of your premiums. Even if you aren’t using your car as much, you should still maintain your insurance policy (especially as most states require it). If you have questions about premium refunds or want to negotiate lower payments, contact your insurer.

Now may also be a good time to reshop your home and auto insurance policies — doing so can save you money. You can compare prices across insurers here.

How do I deal with other debt & bills?

Try to negotiate. Some creditors may agree to payment plans or deferrals.

Student loan payments have been suspended and the interest rate has been set at 0% through Sept. 30, via the coronavirus aid bill. You do not need to contact your loan provider to get this benefit. Those who made a payment after March 13 may be entitled for a refund. But if you’re financially able, keep paying. Any payments made during this time will go directly to paying the principal on the loan.

If you have credit card debt, consider a balance transfer card, which lets you pay 0% interest for a year or more. Look for relief programs in your state to help with debt, including student loans and medical payments. Lastly, free up extra cash by trimming expenses. Cancel nonessential subscriptions, cut down on takeout and consider diverting money you used to spend on things like transportation toward your bills.

I lost my job in the crisis. What are my next steps?

First, understand your immediate options by reading through your benefits package or contacting human resources. Next, apply for unemployment benefits as soon as possible. Each state offers different benefits with different requirements to qualify. In most states, eligible workers can receive a percentage of their previous income for up to 26 weeks. The coronavirus aid package extends benefits up to 39 weeks. Finally, in the midst of a pandemic, it’s essential to have health insurance coverage. Employees who have recently been laid off can pay to stay on their employer’s health insurance plan for up to 18 months, through the COBRA health insurance law. Other options include joining a spouse or family member’s employer-sponsored plan, shopping on the federal marketplace or applying for Medicaid. Check out our coronavirus unemployment guide to learn more.

When should I expect a stimulus check? How much am I getting?

Part of the coronavirus aid bill includes checks for Americans under a certain income threshold. The IRS began making payments last week. Individuals who make less than $75,000 will receive $1,200, and married couples earning less than $150,000 will receive $2,400. Families will also receive a $500 credit per qualifying child. Payment amounts begin to decline after those thresholds and end at $99,000 for individuals and $198,000 for married couples.

Where the check is mailed (or deposited) also depends on your most recent tax return. If you haven’t filed taxes recently, the IRS is developing a web portal to let the government know where to send your check. One advantage of filing your 2019 taxes as soon as possible is to make sure the IRS has the most up-to-date financial and contact information.

What about freelancers or small business owners?

Independent contractors, freelancers and gig workers will be able to get benefits through a new pandemic assistance program established by the federal government. They can receive half the average unemployment benefit in their state and an extra $600 per week from the federal government through the end of July. The coronavirus relief bill also includes $350 billion in loans to help small businesses make payroll. Companies who meet certain requirements can apply for a loan up to $10 million at a maximum of 4% interest. Small businesses with fewer than than 500 employees can also receive a 50% payroll tax credit and can delay contributing to Social Security taxes until 2021.

What if I’m furloughed?

A furlough is considered a temporary layoff. Those who are furloughed can typically return to their job eventually. Furloughed workers are eligible to receive extended unemployment benefits under the coronavirus aid bill. Workers may also be able to negotiate their bills with their landlord, mortgage company or other creditors. Learn how to manage your money on furlough here.

My company cut its 401(k) matching program. Should I change my contributions?

Some companies have temporarily reduced or eliminated contributions to employee 401(k) plans. But if you’re already contributing to a 401(k) plan, don’t stop. Take advantage of any reduced spending to replace your company’s match. If you’re undergoing financial hardship or want to pad your emergency savings, try reducing your contribution amount before stopping contributions altogether. For example, if you’re currently giving 10%, try scaling back contributions to 8% or 6% of your pay. This way you can still save for retirement while preparing for short-term needs.

I’m not retiring for a while, but I’m worried about the crisis' effect on my 401(k). Is there anything I can do?

Time is on your side. Markets eventually recover and grow after recessions. For now, the best advice is to continue contributing to your retirement plan normally, if you’re financially able.

I’ve been reading a lot about estate planning & coronavirus. What should I be thinking about?

The pandemic has led many to think about how best to prepare for the future — including an estate plan, which arranges for what happens to your belongings after you die. Your plan should include things like a will and life insurance policy. It also includes a power of attorney, a legal document that grants someone the power to make decisions on your behalf if you’re incapacitated. If you already have an estate plan, now might be the time to ensure everything is up to date, and if you don’t, it might be an appropriate time to start — here’s how.

Should I wait to file my taxes?

Tax Day 2020 has been moved and taxpayers now have until July 15 to file their federal and state income taxes and make any necessary payments to the IRS. But that doesn’t mean you should wait. The sooner you file your taxes, the sooner you can get your refund — money that could help you during the pandemic. Even if you owe money, filing sooner still helps. You’ll know exactly what you owe ahead of the deadline, giving you time to plan. This tax filing guide can help you get started.

What are the best ways to help people struggling during this time?

If you simply want to donate money to aid coronavirus victims, try GlobalGiving — it’s a crowdfunding organization that connects donors with nonprofits. The World Health Organization also has a Coronavirus Solidarity Response Fund to help at-risk countries track and prevent the virus spread. Direct Relief is providing protective equipment and essential medical items to health care workers. Or, give back to your community by donating money or purchasing gift cards from local businesses hurt by closures.

How do I know my money is going to a good cause?

For nationally recognized charities in the U.S., there are laws and regulations in place to ensure your donation money is used properly. Charity watchdogs can help determine if a charity is legitimate — learn more here.

We’ve likely entered a recession. What else can I do to prepare?

The same rules apply: Get your budget recession-ready (by cutting out extra spending) and set up that emergency fund. If you want to take action, your best bet is diversifying. You can achieve short- and long- term financial goals with a mixed portfolio of stocks (read: high-risk investments) and bond mutual funds (lower-risk investments).

When will things get back to normal?

It depends on your definition of normal. While we may be able to leave our homes in a few months, the economic fallout could last much longer. While Treasury Secretary Steve Mnuchin predicts the downturn will last months, Gina Gopinath, chief economist for the International Monetary Fund predicts the economy won't recover until the end of 2021. The point is, we are in it for the long haul, and your financial plan should reflect that. Think critically about whether your saving and spending habits can support you during an extended lockdown, possibly over the next 12 months. If not, now is the time to make adjustments.

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