The Xe Guide to Personal Finance in Emergencies

Emergency situations often strike with very little warning, leaving you very without much time to adapt or plan. Over this past week, people across the world have made major adjustments to their lives in order to reduce the spread of the COVID-19 coronavirus. From organizations shifting to remote work to government-mandated lockdowns, the world this week is a far cry from what many of us thought to be the norm just a month ago.

Money is one of the greatest concerns for individuals during this uncertain time (along with health). A recent poll found that in the United States alone, 18 percent of people have lost jobs or hours. As more and more governments continue to issue orders to shelter at home, lockdown, or quarantine, this figure will only rise in the coming weeks.

Today, it’s the coronavirus. In the future, there’s always the possibility of a natural disaster or other large-scale emergency forcing you to readjust your habits, spending, and way of life. But for this current situation, here's some of our advice for budgeting and preparing.

What supplies do I really need?

While some of us have fully-stocked pantries and supply closets that could tide us over for months, others aren’t so lucky and have been forced to brave the grocery stores.

Very few of us have the budget to stock up like we’re preparing for a nuclear apocalypse. Instead, make it a priority to have the following essentials on hand, now and in the future:

• Non-perishable food items. Rice, pasta, canned foods, boxed cereal, and frozen foods are great to have on hand in a pinch. And it seems that the general public agrees, judging by the empty shelves in most stores.

• Basic cooking ingredients. Items like flour, eggs, butter, and cooking oil will be essential to almost any recipe.

• Condiments, spices, and herbs. These can turn the basics into delicious (and sometimes nutritious) meals. You’ve got plenty of time to cook now, why not experiment a little?

• (Some) produce. It wouldn’t be wise to fill your shelves with anything that will wilt quickly, but vegetables like onions, kale, broccoli, carrots, and potatoes are more long-lasting and can be added to many dishes.

• Basic first aid supplies. And we do mean basic. Things like adhesive bandages, over-the-counter cold and flu medicine, thermometers, throat lozenges, antibiotic ointments, and disinfectant sprays will be essential in the case of illness or minor accidents. That being said, if someone is seriously ill or injured, don’t try to treat that at home!

• Personal hygiene supplies. There’s a reason toilet paper, paper towels, and tissues are difficult to find now.

• Entertainment. Isolation and boredom can be maddening for anyone, and Netflix binges only go so far. Whether you live alone and are in need of stimulation or you have young children who can get a little stir-crazy, it’s important to have a variety of entertainment. Think abou games (video, card, or board), books, or craft projects like knitting. There’s no better time to learn a new skill!

Cash or card?

This has been a common question among people concerned about the spread of coronavirus. Some think that it’s good to have a stash of emergency cash. It prevents you from having to worry about a power outage or business shutdown affecting your bank access, and paying in cash means you won’t be handling your card after it’s been in strangers’ hands or touching the same card reader that everyone’s been touching.

On the other hand, some have raised questions about the possibility of spreading COVID-19 through the exchange of cash, particularly if they’re exchanging bills at busy establishments. However, Emily Martin, associate professor of epidemiology from the University of Michigan School of Public Health, stated to the Wall Street Journal that she “wouldn’t expect coronavirus to travel far and wide on money.”

So, what’s the answer? It doesn’t hurt to have a few days’ worth of emergency cash on your person or stashed somewhere safe. However, if going to the ATM or bank would put you or others at risk, don’t make it a priority.

Anything to avoid?

You mean, besides other people?

In times like these, the first instinct is to grab everything, just in case. But this isn’t the best approach. We recommend avoiding the following:

• Panicking. We know, it sounds ridiculous to tell you to stay calm in a pandemic. But panicking can lead to impulsive, irrational, and irresponsible financial decisions. Take a deep breath and ask yourself, “What do I need to make it through the day? The week? The month?”

• Buying more than you (and your household) need. As we’ve seen, grocery stores, pharmacies, and other essential establishments will remain open. Take what you need, take a little extra if supplies allow, but don’t hoard. Does one household really need 500 rolls of toilet paper?

• **Bottled water.**If (and only if) your tap water isn’t safe to drink, then you should purchase bottled water. Otherwise, you’ll be fine with the faucet.

• Frivolous purchases. Think of this as an opportunity to look at your spending and subtract from your budget. For example, many of us won’t be going to concerts, festivals, or bars anytime soon. And you probably won’t need to buy as many clothes if you’re spending all of your time at home. If you can, take this money and put it in your savings, or put it toward other, more pressing expenses.

What if I don't have an emergency fund?

You’re not alone. Though common advice is to have 3 to 6 months’ worth of emergency money in savings, less than one-quarter of people actually have that. If you’re not happy with the state of your emergency savings, get started now. If you are still working and receiving an income, try to adjust your budget to allocate some or more to your savings each month.

Looking for more information on building your emergency fund? Here's our advice on that topic.

This is an unprecedented and uncertain time for all of us. We understand the impulse to panic, to overspend, and to worry that we may not have enough to stay safe or keep our loved ones safe. But for most of us, all we can do is prepare ourselves and (safely) support others in any way possible.