7 Pieces of Financial Advice You Should Ignore Right Now, According to Experts

published Oct 4, 2020
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With the US unemployment rate at 8.4 percent and approximately one million new people filing for unemployment each week, money can be a scary thing to think about. It’s especially terrifying for those who have lost wages and are facing an uncertain winter, so five financial experts shared which money rules you can ignore during these Unprecedented Times.  

Plan for the future.

Don’t think about the future. Okay, that sounds bleak, but Philip Olson, CFP and co-host of the PBS Digital Studios series Two Cents, says that if you’re actively in crisis management mode (like if your job, industry, or living situation is in jeopardy), you should press pause on all your long-term financial goals. “Right now, all your focus needs to be on decreasing outflows in favor of cash savings,” Olson says.

Aggressively pay down your debt.

You can put debt on the back burner for a while. “Cash is king in a crisis—the more you have, the more options [are] available to you,” Olson says. “Any extra money you might receive from a stimulus check or a surprise windfall, keep it in cash.” That means you’re better off delaying progress towards goals like investing, buying a house, or aggressively paying off debt in favor of keeping cash on hand.

“Typically, we like to see people mercilessly pummel away at their debts once they’re sitting on more than a month or two’s worth of expenses in cash,” explains Julia Lorenz-Olson, the other co-host of Two Cents. “We also like for people to focus on the smallest debt first, regardless of interest rate. But now, unless you’re in a position of extreme income security, we’d probably recommend pulling back a bit on debt reduction in favor of creating a larger cash base.” 

Pay yourself first.

A common piece of financial advice has always been to “pay yourself first.” Normally, experts suggest putting between 10 to 20 percent of each paycheck into your savings account, but right now things are anything but normal. So, don’t worry about paying yourself. “This advice has always assumed you have a job,” explains Jason Young, founder and CEO of retirement planning site MindBlown Labs. “If you are currently gainfully employed and have no problem paying your bills, then by all means, keep saving 20 percent.” However, if you fall into that 8.4 percent unemployment rate, Young says putting aside that much into your savings is just not feasible. 

Don’t rely on your parents.

Young says if you’re single, renting, and laid off, asking your parents for help by moving back in with them is exactly what you should be doing. “It’s an awesome way to save on rent and can help you protect whatever savings you have.” If you’re not quite ready to return to the nest, Young says you can try to renegotiate your lease instead. “Landlords hate to lose good tenants and may be willing to work with you,” he says.

Always pay your bills on time.

You can stop paying (some of) your bills for now. “We are often told how important it is to pay our bills on time so that we can maintain good credit,” Young says. “For those whose incomes have fallen significantly and who lack adequate savings to see them through the current crisis, they may have to prioritize which bills to pay.” He recommends trying to negotiate with your creditors first, though.

Keep trying to improve your credit score.

Forget about your credit score. According to Wendy Barlin, CPA, CEO of About Profit, and author of recently-released “Never Budget Again”, it’s OK to build up credit card debt right now, as long as you’re making minimum payments and not maxing out your limits. “Will you likely be moving and need a good credit score?” she asks. “If not, then don’t worry about your credit score right now.” 

Stick to your budget—no matter what.

Your budget isn’t set in stone. Financial experts usually tell people to create a budget and then stick to it, but Calvin Harris, CFO of the National Urban League, says right now you need to be flexible when it comes to reviewing your plans and budgets. “Consider whether you need to adjust your savings amounts,” he says. He also recommends taking stock in your mental state.  “During a time where fear is natural, it is more vital than ever to not fall trap to fear-based decisions,” he says. “Be prepared to be flexible on spending, savings and investing, but focus on the long-term.”