Personal finance concerns related to the spread of coronavirus are mounting. NPR’s Audie Cornish talks with Michelle Singletary, a personal finance columnist for The Washington Post.
MARY LOUISE KELLY, HOST:
Today was the worst day on Wall Street in more than a decade. The S&P 500 was down more than 7%. The Dow Jones lost 2,000 points. All this stems from the outbreak of coronavirus and resulting uncertainty about the global economy.
AUDIE CORNISH, HOST:
For everyday Americans, the stock market is just one of many personal finance concerns about the spread of coronavirus in the U.S. There’s questions of sick leave, school closings, health care deductibles and down the road, what a sustained economic slowdown could mean for American workers.
We’re joined now by Michelle Singletary. She’s a columnist for The Washington Post. She writes about personal finance. Welcome to the program.
MICHELLE SINGLETARY: Thank you so much.
CORNISH: People are looking at today’s losses and might have some fear, especially if they have some retirement savings tied up in stocks. So far, what is your advice?
SINGLETARY: You know, for the most folks, I’m telling them to just not panic sell. I won’t say calm down because that’s just not going to happen. I mean, I’ve got money in my retirement accounts as well, and I’m a little like – (laughter) my heart is beating pretty hard.
CORNISH: Right. But to underscore, you said don’t panic sell.
SINGLETARY: Right. I’m not – because I think it doesn’t – that’s just – just tell people don’t be scared – of course they’re scared. But you’ve got to fight through that fear. And please, guys, don’t panic sell. That is the message of the day.
CORNISH: What about people who are currently retired?
SINGLETARY: So if you’re currently retired, hopefully you already have a balanced portfolio. And it’s already appropriate for the fact that you’re retired. So you wouldn’t have 100% in equities. And if that’s so, you still should not panic sell because that money still is going to need to grow.
CORNISH: Now, another issue – the coronavirus outbreak can affect people in many ways beyond the stock market. One concern I’ve heard is from working parents – right? – in terms of possible school closures. Can you talk about how people can prepare for that?
SINGLETARY: So if you’re a working parent and perhaps your company doesn’t have a liberal leave policy or maybe you don’t have a lot of sick leave, now’s the time to put an emergency plan in place. Talk to other parents. Perhaps you could trade off. So if one parent goes to work, the other parent can watch the kids. And then for a couple of days, you switch.
So now is the time to put those plans in place. Call grandma. Can she come and help – or auntie or maybe another stay-at-home mom can pitch in for a couple of days. So put in a plan, if you have small kids, now for what will happen if you still need to go to work.
CORNISH: The other thing you have written a lot about is the idea of an emergency fund, which sounds like a good idea. But we know a lot of people don’t have them. Can you talk about how to think about this in this moment?
SINGLETARY: I have often advised people to have an emergency fund, and they say things like, well, what the money’s not going to grow and it’s not earning much. But this is the time that you plan for that. And if you don’t have an emergency fund now, you’ve got to cut. Cut out your streaming services. You stop shopping. You cut back on eating.
You do everything and anything you can to save as much as you can. I don’t care if it’s just $20. That’s 20 more dollars you’ll have if you end up working and you’re not going to be paid. And I know there are a lot of people who are just getting by, but you have to save something.
CORNISH: Going forward, people have been talking about the idea of a potential recession, and the uncertainty around coronavirus is bringing this conversation back to the forefront again. How should we view this as consumers?
SINGLETARY: You know, this is going to sound crazy, but I operate my financial life like every day is a recession. And I know that sounds extreme. But recessions come, and they go. The economy ebbs and flows. And so you – the one thing that you can keep constant is to build an emergency fund, keep your debt slow. You know, for example, there are lots of parents who are right now deciding where to send their kid to school. So this is the time to say, I cannot afford to send my kid to a school where it’s going to cost 20 or $30,000 a year that I don’t have.
So you need to always be recession-proofing your financial life, not when an actual recession is here – it’s almost too late then – leading up to it. So this is a good lesson that we should always be living below our means as if a recession is going to happen tomorrow.
CORNISH: That’s Michelle Singletary of The Washington Post. Thanks so much.
SINGLETARY: You’re so welcome.
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