How To Protect Yourself Financially This Winter
By: Jay Michaelson
Tags: Personal Finance, Economy, Life Lessons, Money, Covid 19

At this point, there seems to be little doubt that the novel coronavirus and COVID-19, the disease it causes, will be with us through the winter months. In fact, more and more infectious disease experts are predicting a resurgence of cases that may top the previous peak seen in late spring.

As temperatures drop across most of the United States, outdoor activities that have been a lifeline for many of us are ending. What will replace them, we don’t know yet, since the research still suggests that congregating indoors isn’t nearly as safe as socializing outside.

Along with the decrease in available safe social activities, experts are also predicting another slump in the stock market as spending decreases and the market contracts again as more and more states ponder renewed lockdowns, quarantines, and other measures to get us through the winter.

All of this means that, for many of us, the threat of economic hardship is once again looming. For others, economic hardship hit in March or April and has yet to subside. How are we to survive the coming winter, if the market drops, unemployment remains so high, and the normal holiday spending boom doesn’t happen because of another round of quarantine? Well, while I don’t pretend to have all the answers, here are a few suggestions that might help make this winter a little less stressful for you:

Have A Plan For The Unplanned Events

Everybody says “have a plan” but nobody really tells you what to do when the actual universe throws out it’s playbook and starts winging it. Who could have planned for any of the crazy things we’ve lived through in the last year? So how do you plan for the unfathomable?

Well, first of all, you should discard the idea that you can create one plan and stick to it. To borrow a term from my own background as a military logistics planner, you need to plan for multiple courses of action and multiple unknown contingencies. How do you do that? Well, there are a few things to consider. First, we’ve all been living through this pandemic for almost 12 months now, so we know a lot more than we did back in the spring. We know how to quarantine. We know how to get food, clothing, shelter and how to stay safe doing so. We know how long our “rainy day” fund will REALLY last in a pinch. We can use this information as a starting reference to plan for the winter.

For example, if you live in a state that is contemplating renewed lockdowns, you may want to keep more cash on hand than you normally would. Not because the world is ending and your debit card won’t work, but simply because during a winter lockdown, it may be more difficult to get to a store or gas station in snow or ice, and you may have to pool resources with friends so one person can go buy groceries or other items.

Have A Plan To Avoid Expensive Wintertime Boredom

The second part of your plan is a sober accounting of how you plan to spend your time this winter. I know during the last lockdown, we all had great plans to learn new skills, deep clean the house, take up an instrument or finish writing our first novel, but the reality is that we all just binge-watched Tiger King and ordered crap we didn’t need on Amazon. Boredom, my friends, can be expensive.

That temptation to apathy will be even harder to resist during the cold winter months. It will be that much more important to plan for pleasure purchasing without going overboard. A month or two of quarantine was bad enough, you can’t afford to live like that from now until March, when the weather warms back up.

Have An Emergency Fund (But Maybe Not The One You Think)

If you don’t already have an emergency fund, or if you did but the first round of lockdowns forced you to deplete it, it’s highly unlikely you’re going to be able to save up the usual 3–6 months living expenses before the weather really turns cold and you barricade yourself indoors. Fortunately, there’s another way to protect yourself and your family from unforeseen expenses during the winter.

Do you have a Roth IRA? Did you know that you can use a Roth IRA like an emergency fund if needed? You can withdraw the entirety of the principle from your IRA, penalty-free, so long as you don’t touch the interest or capital gains. While normally, I wouldn’t recommend touching investment money for day to day expenses, in a true emergency, your Roth IRA may be the lifeline you need.

Have a Good Mindset

One of the most financially harmful things that happened to me back in the spring was I lost my positive mindset about money and began to feel like it didn’t matter how much I spent or what I spent it on. When your world has contracted to the inside of your own home, and you can’t leave, suddenly remembering to save and invest for the future sounds pretty silly and meaningless. “What future? What’s the point? We’re never going to get out of this dumb lockdown!” If you’re like me, you had those thoughts frequently during the spring quarantine. You don’t want a repeat of that this winter, when not only is it boring and claustrophobic being stuck at home, but now it’s cold and dark outside too! Maintaining your financial mindset is crucial to economic survival. If you want to feel less stressed out about money this winter, you have to remember that life will one day resume. The calmer and more rational you can be during the long nights of winter (and stressing about money will guarantee you WON’T be able to stay calm or rational) the better you’re going to be when spring rolls around again and the world comes back to life.

Put A System in Place to Pay Yourself First

When the cold weather hits and keeps us all indoors, that could be the perfect time to launch that side hustle you’ve been thinking about, especially if it’s something that can be done from the comfort of a home office. HOWEVER, before you go googling how to make a million dollars from your couch, you need to understand that the most important thing you can do to protect yourself financially this winter when it comes to starting any kind of new business or side hustle is to PAY YOURSELF FIRST.

Now is not the time to start a capital-heavy, front-loaded business. Overhead is evil right now. If item #1 on your new business plan isn’t to make sure that whatever you’re doing to supplement your income actually supplements your income, you need to revise your plan. There will be plenty of time to start that dream business of yours later, you know, the one that will consume your nights and weekends and not show a profit for the first year? Right now, the first and main priority should be earning money.