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Preparing for Life After Coronavirus
Over the last few weeks, one of the major areas of focus of The Simple Dollar has been on getting through this current era of social distancing and its consequences. Here are a few of those articles:
Lost Your Job? Take These Four Steps First offers immediate advice if you’ve suddenly lost your job.
8 Things To Do To Prepare for a Recession highlights strategies you should follow if you anticipate an economic recession coming in the near future, which is being predicted by most economists.
Will This Working from Home Period Change the Future of Many Jobs? looks at whether or not this period where many people who are working from home will change some aspects of employment in the future.
Today, I want to address something slightly different. What exactly is your game plan if you have a steady, stable job, but want to prepare yourself as best as possible for the opportunities and risks that are likely to occur over the next year or two? What if you’re a teacher or a key employee at a company that produces essential goods, for example?
Here are some strategies for preparing personally and financially for a period of uncertainty when you’re starting from a position of relatively stability.
Here are some strategies for preparing for the next few months.
Over the coming months, some aspects of modern life will return to something similar to what existed before. Some of us will return to our old workplaces. Some level of travel will resume. Many smaller businesses will reopen. Our routines might be somewhat different, but some aspects of normal pre-social distancing life will return.
Different people and businesses will assess the risk of these changes differently and will respond in different ways. Here are some strategies you can use to maximize your security, value and opportunity as these changes take shape, starting immediately.
Use the enforced frugality of social distancing to shore up your financial state.
Right now, with so many businesses closed or limited and many areas toiling under some form of a stay at home order, nonessential spending for many people is in significant decline. We’re not eating out. We’re not commuting. We’re not going shopping other than for essentials.
As a result, many of us are noticing that our credit card bills are much smaller than before and that there’s a lot more sitting in our checking account once the bill is paid. Don’t view this as a chance to splurge. View this as a chance to prepare.
Get every bill up to date. If you are behind on any bills, use that surplus to get up-to-date on all of your bills. This is a great opportunity to escape the cycle of late fees that can be very hard to escape from once you’re behind on multiple bills. Focus on getting the one with the biggest late fees up to date, then get through the other ones. At the same time, make sure that you’re keeping a buffer in your checking account to avoid any risk of overdrafts. Overdrafting is another unnecessary fee that can keep people in a bad financial cycle, and this is a great opportunity to break out.
Build up an emergency fund. An emergency fund is simply a pool of cash you have set aside to deal with emergencies, like a car problem, job loss or an unexpected illness. I usually recommend having a small cash emergency fund stowed away at home and a larger one in a bank savings account that’s replenished slowly over time with an automatic transfer from your checking account so that if you ever need to tap it, it refills on its own. Here’s a great guide for getting an emergency fund started.
Pay down high-interest debts rapidly. If you have any high-interest debts, start paying them off (once you have your bills caught up and a small emergency fund in place). Start with your highest interest debt, make minimum payments for the month on all other debts, then make the biggest extra payment you can on the debt with the highest interest rate. If you can eliminate that one in a few months, great! Move on to whichever debt is now the highest interest debt, and keep going until you have all debts with an interest rate above 7% or so paid off.
Minimize as much short term risk to your life as you possibly can.
Short term risk refers to things that could cause a big unexpected financial or time expense. Right now is a great time to shore up those things. Here are some key steps to take.
Pay attention to your health, particularly right now. You should be eating healthy foods (meaning you’re simply putting more fruits and vegetables on your plate and less meat, dairy and bread, not that you’re abandoning everything you like). You should be getting as much exercise as you reasonably can (anything you do that gets you a little out of breath or sweaty is good). You should be getting plenty of sleep each night, ideally enough so that you rise naturally instead of with an alarm. Taking care of just those three things will help you feel a lot better, boost your immune system and energy level and stave off a lot of long-term medical conditions.
Find healthy ways to keep your mood up and avoid cabin fever. Find time each day to pray or meditate. Start a journal. Give yourself blocks of time to dive into a hobby that you love without interruption. Go outside in whatever amounts you can, and if you can’t go outside much, at least keep the curtains open and get some sunlight. All of this will help keep your mood up and your mind clear, which will help with literally everything else mentioned in this article.
Lean into spending less when the choice is reasonable. As I noted earlier, social distancing is making most of us spend less in most areas. That’s good, but you can do even more. Whenever you do have a spending choice, lean into the option that means spending less. Go through your credit card statements and online accounts and get rid of recurring payments that don’t mean much to you. When you go grocery shopping, buy store brand supplies when you can’t clearly articulate the difference.
Expand and secure your transportation options. How do you get back and forth to work? What’s your backup plan if that isn’t working? For example, if you telecommute, what do you do if your home internet dies? If you drive to work, what do you do if your car doesn’t start? Have a backup plan, one that you can enact immediately if transportation fails.
If you’re working from home, extract every bit of value from the experience.
You should be using this opportunity to build every skill you can related to working from home, both because the length of time you’ll be working from home is uncertain and because that skillset will become increasingly valuable. Here are some specific things you should be doing.
1. Figure out how to focus on work for full workdays in a home (or other remote) environment. The ability to focus on your work and get a full day’s work done outside of your normal office environment is a skill that a lot of people simply don’t possess. Put a high value on figuring this out for yourself, not only to amp up your professional effectiveness right now, but also to put yourself in a position where you can always do this going forward. As someone who has worked remotely for many years, the most effective strategy I have to offer is to find a distinct place in your home that you define as a “workspace,” only use it for that, and kill as many distractions as possible when working in that space.
2. Develop practices for communicating effectively with coworkers when you’re not face-to-face. The key is “effectively.” Most of us have tools for communicating with coworkers, but often those tools are used imperfectly. Learn how to really use the tools at your disposal effectively. Start by considering how you can use these tools to firm up workplace relationships, and also consider what messages and information you receive is most useful for you in getting your work done and aim to emulate those things and avoid things that are frustrating, ineffective and annoying. You should also review some best practices for written communication and do your best to follow them; here’s a nice general guide and a guide to writing great emails. Take it seriously, with the aim of truly communicating better.
3. Start creating documents and resources such that, going forward, there’s less need for you to be physically present for tasks. For example, if you’re a teacher, start preparing as much material as you can that functions well for both in-person learning and online/distance learning. Consider the work you do and ask yourself what you can prepare that minimizes your need to be physically present, then create as much of that material as you can.
4. Master your own daily routine, alternating periods of communication with periods of focused work. There’s no better time than right now to figure out how you work best. What times of the day are you best at drilling into challenging tasks? What times of the day are you a little less focused but still able to handle emails and meetings? Figure this out for yourself by observing your own energy levels, and then use that to form your daily routine for maximum effectiveness.
5. Develop your own systems for meeting deadlines on projects and tasks while working outside of direct management. Being able to work independently, managing your own time and deadlines and appointments, is an invaluable skill to have, and the stronger that skill is, the easier it is to work outside of the office.
6. Carefully consider whether to return to old habits and routines as they become available. As I recently wrote, not every part of your old “normal” is worth rushing back to. Now is a great time to cast a serious eye at your previous normal routines and figure out, from this position of a bit of distance, which routines really bring value into your life and which ones do not.
7. Ask yourself now which routines and habits you actually miss. Of all of the routines and habits you had before social distancing began, which ones do you really miss? Those are good ones to keep. Now, flip that around — think about your typical days and weekends before social distancing and look at all of the other routines you engaged in, particularly trying to think of ones you barely remember or had little impact on you. Those are the ones to cut out. If you’re struggling to remember them, go back to your credit card bills and bank statements, as your routine purchases will often clue you into forgotten routines.
8. If you do miss a routine, figure out how you can reimplement that at home. Is there a way to recreate the routine you miss, at least in some form, at home? For example, if you really relished picking up a yummy morning coffee, perhaps you can spend this time figuring out a routine for creating something similar efficiently at home. This won’t work for everything, but it’ll definitely work for some things.
9. If you don’t miss a routine, make it a point to not return to that routine. Be very conscious of this as things return to some form of normal. Don’t just settle right back into old patterns. Instead, think of everything as new and try to avoid all of those old patterns and routines that you identified as not being useful or valuable. Avoiding them will save you a lot of money while also giving you more breathing room and opportunities to discover new things.
Here are some strategies for preparing for the long term.
Over the longer term, more and more things will return to normal or develop a new normal. Some things to expect include a very deep economic recession that will change the nature of some organizations and likely involve some belt-tightening at all organizations, a greater value placed on independent and remote work and an uncertain stock market with a lot of volatility that will eventually hit a bottom and rebound.
Here are some things you can start doing right now — and enhance as things return to normal — to help you avoid those pitfalls.
1. Continue to develop professional skills and resources that enable you to work remotely as needed (and desired). Approaching your work from the perspective of “what would make you most effective during a future stay-at-home order” is going to be a very valuable approach to take going forward. This overlaps extremely well with making yourself a more effective stay-at-home employee, but it goes beyond that.
2. Put systems in place so that you can do as much of your work as possible outside of your workplace. When you’re back in the workplace, start looking at what you can do there to make yourself as effective as possible when you’re not in the workplace. For example, if you’re a software developer, you should set up as much of your development environment as you can so that it functions when you’re not in the office.
3. Develop materials in such a way that they will function well if you’re unable to be in a face-to-face environment. You should also consider whether there are materials you can prepare in a different way such that they’re more effective if you’re not available for face-to-face presentation. For example, if you’re a teacher, consider developing your lesson plans in such a way that they easily translate to distance learning, giving you breathing room to nudge them toward face-to-face learning techniques if that’s what you’re facing.
4. Bump up your retirement contributions. While your first response to the current financial situation should be to shore up your basic finances, as described earlier, the next thing you should consider is increasing your retirement contributions once your own finances are stable.
5. Investing now means that even if you don’t time the bottom of the market exactly, you’ll still be “buying low.” While market timing as a general principle is a fool’s errand, buying into stocks during a recession and as an economic recovery gets started is far better than buying stocks after several years of constant upswings in the stock market. That’s not timing, that’s common sense. So, amping up your retirement savings now means you’ll get to ride the entirety of the next bull market. Note that you should only be investing heavily in stocks in your retirement account if you’re more than ten years from retirement; as you get closer, your investments should be more measured.
You’ve learned during social distancing that you can live a good life without a ton of spending. There’s your breathing room that you need to bump up your retirement savings. The more you save, the better you’ll be in retirement. This is the real truth when it comes to retirement savings. The more you save, the better you’ll be in retirement.
6. Prepare in sensible ways for future difficult times. There are lots of practical steps that you can take on to prepare for future pandemics and natural disasters without going to “prepper” extremes.
Practice common-sense steps for bumping up your food, water, first aid, and household supplies. If it’s a non-perishable item that you use often, have a supply of extras on hand and replenish that supply regularly. For example, if you eat pasta with marinara sauce regularly, keep some extra jars of marinara sauce and boxes of pasta on hand, eat the older ones first, and replenish when your reserves run low. You can do this exact thing with basically every non-perishable food item, first aid item, household item and beverage.
Make your home as energy independent as possible. Look into the feasibility of installing solar panels in your home with battery backups. While the up-front cost is expensive, there are some tax breaks available and the savings often reach a break-even point around the t10-year mark. It also makes you largely independent of the electrical grid. Beyond that, consider things like geothermal heating and cooling for your home, which follows a similar cost profile and timeline.
Establish strong relationships with neighbors and others in your community. This is always a good thing to have. Help your neighbors out when they’re struggling and when times are good, too, and you’ll find that they’re likely to help you when times are tough for you.
Take steps so that your life is great no matter what the future holds.
The goal of all of these steps is simple. You want to hold onto the aspects of your life that you most value and maintain them, no matter what the future holds. If 2020 has taught us anything, it’s that most of us are a little less independent than we thought and that unexpected things can strike at any time.