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Expert answers to 4 FAQs about how to manage money during the coronavirus

Courtesy Marguerita Cheng

Managing your money can be a challenge, especially when your financial situation changes suddenly. That's been the case for millions of Americans since the coronavirus pandemic began accelerating in mid-March. 

How should you handle your finances, given everything that's shifted? Try to pay down debt first or build up an emergency fund? Keep investing or wait til the stock market calms down? 

Below, Farnoosh Torabi, host of the podcast So Money, and certified financial planner Marguerita Cheng, a member of the CNBC FA Council and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland, offer answers to some of your most frequently asked questions about handling money during the pandemic. 

1. Should I keep saving if my income has changed?

"Keep saving your money if you don't have at least a 6-9 month emergency savings account that can help you continue to afford your necessities in case you lose your job or cannot work," says Torabi.

An emergency fund is a type of savings account that can help you cover large, unforeseen expenses like having to fix a flat tire or to afford an urgent dental procedure. It can also help you cover regular expenses if you lose your job. 

Cheng agrees that, if you're still able to save, then yes, it's great to try to save. It is certainly OK to make adjustments in your savings, though, particularly if your income has changed.

"I have had clients whose income has dropped," says Cheng. "They're very goal-oriented, and they were contributing the max to their 401(k), and I spoke to them on the phone I said, 'Here's the thing: I know you're committed to your goals, but you need to drop your contribution by 20%.'"

2. Should I prioritize paying down debt or my emergency fund?

"Normally, debt should be a high priority," says Torabi. "But right now, with so many lenders providing relief, if you lack savings, a better move is to call each lender and ask about possible payment deferments and other allowances to give you some wiggle room in your budget, and allow you to bank that monthly debt payment into a savings account."

"If you're able to continue paying your bills and your debts during this time, by all means, take advantage of that," says Cheng. If you've had a reduction in income, though, take advantage of any relief programs available to you. And, she adds, don't worry: Taking advantage of those programs is not going to damage your credit

It's OK to switch gears and prioritize your savings or emergency fund before your other financial goals if you need to, Cheng adds. 

3. How should I adjust my budget if my income is disrupted?

If your income has been disrupted, you'll want to adjust your budget, Torabi says, factoring in unemployment benefits, partial pay, a combination, or whatever else you're working with in terms of income. And in terms of expenses, eliminate everything that does not qualify as an absolute need, such as monthly subscription plans or new clothes. 

You can try to reduce your fixed expenses, too. "Talk to your landlord about reducing your rent or deferring payments," says Torabi. "Talk to your car insurer about reducing your premium, since you're probably driving a lot less these days."

"Set up money dates with yourself and your partner to review your budget. Think about your outflows and your inflow and how you can make adjustments," says Cheng. 

She also suggests speaking with your student loan servicer or your mortgage company and postpone those payments if your budget doesn't allow for it at the moment. Cancel any subscriptions that you have that you don't really use anymore, or see if those services are offering any payment relief. 

"This is the time to do some spring cleaning, but for your finances," says Cheng.  

4. Should I stop contributing to my retirement account until things calm down?

"Try to stay the course when it comes to your retirement savings strategy. If you've been contributing to your workplace 401(k) or Roth IRA, stick with it if you can," says Torabi. "If you lack emergency savings of at least six months, then focus on building up that cushion first before investing."

For long-term investors, Cheng says, this is the perfect time to invest. 

"Some people, it doesn't matter if they're older or younger, may think, 'You know what? This is a great time to get in,' and it is if you're a long-term investor and you don't have $2,000 hanging around to dump into the market," says Cheng. "You can benefit from the volatility by doing dollar cost averaging, which is a fancy way for saying, systematic investing throughout the year."

Entering the market now could seem daunting at first. "It is 100% true that if you log into your 401(k), you will see red on your existing dollars because they went down in value, and that is painful," says Cheng. "It's OK to be stressed. It is OK to be concerned, but you don't want to panic and react, and pull that money out." 

It can help to remember that, historically, every market downturn has ended in an upturn. 

If you're able to, continue to invest, Cheng says, even if it's only $50 a month. And remember that right now you're able to purchase "on the lows," or take advantage of price fluctuations in the market to get more for your money. This can be a good strategy for increasing your overall balance. 

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