For the past few weeks, the top news stories have focused on the Coronavirus (COVID-19). Public health agencies are closely monitoring the spread of the virus and health implications for individuals and communities. Not only are there physical health implications of an epidemic like Coronavirus, an emergency such as this can also impact a family’s financial health and stability. What would happen if individuals couldn’t go to work to earn a paycheck due to the spread of the virus? How would they pay the bills? We have heard the statistic from the Federal Reserve that, “Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money” (Report on the economic well-being of US households in 2017).  In addition, many people are concerned about the impact of the situation on their retirement savings.

Often, an individual or family’s reaction to an income loss is slowed by the expectation that the change is temporary or that they can manage, but in the interim, individuals often don’t decrease their expenses to match the reduced income. Studies have found that it takes many families six months to adjust their spending after their income is reduced (Danes, S. & Stumme, P., 2001). Those six months of ignoring the situation can bring financial disaster. As financial professionals, we can help individuals and families take charge of finances immediately, and make positive contributions to their well-being now and in the future.

Consider these strategies and resources when working with individuals and families concerned about the impact on their finances:

  • Identify potential changes in income if someone is unable to go to work or if a place of employment closes. See Adjusting to Income Loss resources and video to help set priorities and identify suggestions and resources for getting through tough times.
  • Create or update a spending plan to reflect any anticipated changes in income or expenses
    • Set spending priorities in the event that income falls
    • Involve family members to identify strategies for spending less
  • Identify which debts would be the most challenging to stay current if income is reduced. Develop a plan to communicate with creditors if a person is not able to meet obligations.
  • Assess emergency fund. It is recommended to have 3-6 months of expenses in an account that is readily accessible. Identify available resources to start or enhance the emergency fund.
  • Encourage individuals with reduced income to apply for unemployment benefits from their state. Some states, such as MN, may offer unemployment benefits if the individual has contracted the disease and needs to avoid contact with others or if their school district, daycare, or other child care provider has canceled services and the person has not been able to locate other reasonable accommodations.
    • Locate state specific unemployment services on this U.S. Department of Labor website.
    • Also, stay up to date on the news regarding federal assistance that may be available to all families. Awareness of what will be available helps to plan ahead as we move forward.
  • Have cash on hand in the event that banks, ATMs or credit cards are not available.  Approximately $200-$300 in small bills is recommended.
  • Review credit report at to determine current debt load. Could additional debt be utilized and sustained after an emergency?
    • Determine debt to income ratio; monthly debt payments divided by monthly net income = debt to income ratio; 15% or less is ideal
  • As needed, utilize online banking and online bill paying options to manage finances.
  • Review health insurance to determine current coverage, assess needs, understand how the policy works, and identify needed changes.
  • Organize and review important papers so they are easily accessible. (Video available.)
  • Complete or review a Health Care Directive to identify who you want to make health care decisions for you if you aren’t able. Share this document with your identified person, family and health care provider. Each state has unique laws regarding health care directives, so investigate your state’s information. For example, Minnesota has a Minnesota Health Care Directive Planning Tool to aid in decision making.
  • Seek assistance from an Accredited Financial Counselor 
  • Discuss steps to Surviving a Volatile Stock Market using this fact sheet or short video.
  • Make backup plans for childcare, work, and elderly family members
    • Plan for what you’ll do if your children’s school or childcare provider closes.
    • If you can work from home, make arrangements now that can be activated later.
    • Plan ahead of time so that more than one person is available to check in on elderly or vulnerable family members. This guide from the Red Cross is helpful.
  • Search out and utilize community resources to stretch income as needed, including assistance from governmental and nonprofit organizations. Many schools and communities may offer free meals for children when schools are closed.
  • Be aware of Coronavirus related scams. The Federal Trade Commission offers tips to keep scammers at bay.
  • Create a household plan of action and prepare your home for a potential Coronavirus quarantine by collecting necessary food, general household items, medicines, items for children, etc.
  • Take steps to control stress and help children cope with their fears. Identify sources of support and friendship.

We invite you to suggest additional strategies and resources to help individuals take positive action to improve their financial situation and reduce stress.

For more information, contact:

  • Sara Croymans, AFC, Extension Educator, University of Minnesota Extension;
  • Lori Hendrickson, AFC, Extension Educator, University of Minnesota Extension;

5 responses to “Financial Health: The Case of the Coronavirus”

  1. Very disturbed to read the recommendation that people should “Have cash on hand in the event that banks, ATMs or credit cards are not available.” This is fear-mongering and can actually create the exact outcome predicted, simply by scaring people into believing it (like the ridiculous run on toilet paper, except much more serious). As an AFC, I am asking you to remove that line from the paper.

    Anyone posting or blogging at this time can be part of the solution by taking leadership and standing firm in the knowledge that this problem, like so many others, will pass. This is a good time for families to reevaluate their finances and make the best plan possible to address any concerns in the next few months. It is also a great opportunity to see which aspects of their finances they would like to restructure in the future, to feel more solid going forward

    • I disagree. That is not fear-mongering. We do that for hurricane prep during hurricane season. That is being prepared.

  2. Thank you Money Mindful Personal Finance Coaching for the discussion about the value of having cash on hand. We are not attempting to arouse public fear or alarm about having cash on hand, we are simply providing preparedness strategies that some individuals may find useful in the event that banks or ATMs are not available or if credit or debit cards are not accepted. The strategy of having cash on hand was identified in recent disaster preparedness focus groups we conducted with disaster professionals, survivors, and volunteers. In addition, the Department of Homeland Security recommends on their Build a Kit webpage that folks include “cash or traveler’s checks” in their emergency kit.
    Disaster preparedness is all about hoping for the best while planning for the worst. Of course, the safest place to keep large amounts of money is in a financial institution. Many banks and credit unions are limiting lobby hours while other locations are asking customers to make appointments for certain services; limiting customers to drive-through access only; and some are even closing some branches entirely in an effort to support social distancing which is so critical to slowing the spread of the coronavirus. With the popularity of online banking and banking apps most people will be able to continue paying their bills online. However, it is best to be prepared with cash in hand in the event that local purchases for gas, groceries or other necessities require cash.

    • May I share my thoughts with you? I don’t believe the authors meant to make it sound like fear mongering, but as what to do to prepare for disaster. We have never experienced a disaster such as this.

      In NYS, we are finding that banks are open by appointment only due to the government closing all non-essential businesses and only 25% of staff otherwise; except in certain industries. Also, staff in some businesses are fearful of working now as the virus is spreading quickly. So, the banks may have only one or two staff members on hand, with doors locked. As more people become sick, who will service and fill the ATM’s? Many are saying to pay with a card only as cash may contain the virus.

      On the other side of the coin, a person may need cash to tip someone dropping off prepared food, groceries, or medicine while we are required to stay-at-home. Once, after a hurricane, we had no power and we could only pay for things with cash. So you never know what the future may bring.

      Helping a client to see and figure out if and how much cash they may need and feel comfortable with to have on hand is a good thing. Having a small amount of cash on hand in small denominations may wind up being a blessing for some.
      The Girl Scouts motto is “Be Prepared”. This helps empower young girls. We should think of this to help empower our clients. Thinking of the “what-if” and preparing for it reduces stress. Believe me, we have a great deal of stress already in NYS. Thinking about going out or having money to tip a brave delivery person is one less stressor.

      Please stay safe!

      Thank you!

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