The economic fallout from COVID-19 has been swift as many reel from faltering paychecks and falling investments. Add to that an increased concern for health and safety, and it’s easy to see why consumers today are, well, uneasy.
All this uncertainty can lead people to commit money blunders they wouldn’t commonly make. However, at a time when there are so many things outside of our control, it’s more important than ever to zone in on those within our control and avoid making unnecessary financial mistakes. Here are six areas where you should maintain your guard.
1. Price Gouging
The Problem: Many of us have seen the news accounts of stores or online sellers demanding unreasonable sums for hand sanitizer, toilet paper or face masks. It’s certainly common consumer behavior to pay a premium for an item you perceive as being in short supply, but it’s easy to lose a bundle by overpaying for goods unnecessarily.
The Remedy: The good news is that most consumer product brands have assured the public that supply chains are healthy, and they are continuing to manufacture the items that may temporarily be in short supply. In the meantime, see if you can substitute another item or borrow from a neighbor or friend via a porch pick up.
The Problem: Back to those empty store shelves…when you see fellow shoppers with overflowing carts, it’s easy to get caught up in the madness and purchase any items you can get your hands on to fill your pantry and freezer. But then you get home to unpack your bags and realize that no one in your family has ever touched canned meat; you aren’t sure how to prepare dried beans to make them palatable and one family could never consume that much arugula before it spoils.
The Remedy: When you’re at the store, shop as you normally would, purchasing items your family likes and that you will be able to eat in the next week at which point you can, yes, go to the store again. Unlike in a natural disaster when deliveries may be limited, shelves are being replenished regularly. If you did overbuy, avoid food waste by swapping with a friend whose family is craving quinoa or donate the item to a food bank so that it’s not wasted.
3. Selling Investments At a Loss
The Problem: Watching your investment portfolio dwindle can be terrifying, but most people should avoid selling investments at their low point if it can be avoided. After other similar stock drops, the market has always rebounded eventually, and anyone who moves their money out in a downturn is likely to miss the bounce.
The Remedy: Now is not the time to veer from a long-term perspective, so if you’re concerned about your accounts, talk with your wealth management professional to discuss your financial goals. In fact, if you can, you should keep contributing to tax-advantaged accounts, like your 401 (k), at least up to your company’s match if it provides one.
4. Avoiding Payments You Can’t Make
The Problem: Many consumers may find themselves in a situation where they end up with more bills than income, as people lose their jobs or find their bonuses or hours are cut. However, skipping payments can ding your credit score, and it can take a long time for it to recover.
The Remedy: If you are in danger of missing a payment, always contact your service provider first to see if they can help. For example, many mortgage providers are offering mortgage assistance and relief options, including Fifth Third Bank, which has announced a comprehensive hardship relief program that extends to vehicle payments, credit card assistance and more. If you’re unsure what your provider is offering, contact them to check your options and see if, at the least, they will work with you to negotiate a payment plan.
5. Not Filing for the Assistance You Are Due
The Problem: It’s easy to become overwhelmed by all the news of programs designed to provide relief to consumers and small businesses and wonder which ones apply to you, and then which are automatic or require action.
The Remedy: As new programs are announced almost daily, take the time to see what’s available from your state or local government that might require you to complete an application, such as unemployment benefits. The great news is that many recently announced programs don’t need any action, such as the payments from a sweeping relief package, the Coronavirus Aid, Relief and Economic Security (CARES) Act, which will be disbursed soon in the form of a stimulus check that will be automatically sent to most taxpayers during the month of April. The CARES Act has other provisions, too, such as allowing borrowers to temporarily stop making payments on federal student loans and suspending interest between March 13, 2020, and Sept. 30, 2020.
6. Falling for COVID-19-Related Scams
The Problem: The phishers and scammers are out in full force, says the Federal Trade Commission, which reported it had received more than 7,800 COVID-19 related complaints between the beginning of the year and the end of March. Consumers reported a median loss of almost $600 from hoaxes that included false vacation refunds, fake test kits and more. That number could rise as scammers try to gain access to your bank account by claiming they need log-in information to deposit your upcoming stimulus check.
The Remedy: Be wary of calls or emails that appear to come from the government or the Centers for Disease Control and Prevention (CDC) or that offer testing or a “cure.” Never click on a link in unsolicited emails since it could provide a thief access to the data in your files. And remember that Fifth Third (or any bank) will never ask for your account number over the phone or via email.
Although many consumers are facing unavoidable financial hardships, the good news is that there are also many areas you can control. By staying cautious, you can avoid making a financial mistake that you may still be paying for even after the economy recovers.