As of today, large parts of Europe are in effective lockdown in an effort to fight Coronavirus. It’s not about preventing infection anymore, it’s about managing it and slowing it down. What can you do during this Corona lockdown?
Corona in Europe – an overview
I’m Dutch. Here in our little country we have been quite slow to respond to the world-wide outbreak of the coronavirus.
Yes, the advise was to not hug and not shake hands. Wash your hands more often, and for longer. I get it. But we’ve not been taking measures fast enough. That’s my opinion, I’m not a medical professional.
Yesterday evening (Monday 16 March 2020) our prime minister announced the strategy going forward. Our lockdown continues for at least three weeks: that means schools, restaurants, sports clubs, bars will be closed. That means events will not be happening. That means almost no flights taking off. It means the economy is taking a direct hit to the face in order to slowdown the coronavirus. Because that’s what we’re doing.
Slowing Down the Virus instead of Preventing
You probably have heard it by now: most of us will get infected with Coronavirus in the next couple of years. Estimates range as high as 80-90% of the population.
No, I’m not trying to scare you. I don’t need more panic. But I want us all to know what’s likely to happen. I am likely to get the virus. You are, too.
In itself, that’s not a bad thing per se. Sure, being sick is never good and this nasty little virus has a habit of killing more people than other flu-like viruses. But, as long as we can spread the infection rate over a longer time, our healthcare system will keep functioning.
If we do nothing, and the virus can spread uncontrollably, healthcare will get overrun by sick people. That is what has been happening in Italy now. Doctors have had to triage patients, in other words deciding who may live. That’s what’s scary to me, not the virus itself.
So please, everyone, remain calm and do everything you can to prevent the exponential growth of the virus in the next couple of weeks. The longer we can delay this bastard, the more chance we have of providing our sick with adequate care.
You probably have seen this chart by now, but it doesn’t hurt to see it again:
How the Economy is Being Hit during the Corona lockdown
It’s no secret the economy is being hit by this Corona lockdown. The stock market is now down over 30% from its peak (using VWRL as a proxy to the stock market).
With airplanes being grounded, the airline industry is facing massive challenges. Most airlines are already laying off temporary workers and filing cases for government support.
The services industry is also screwed. With events cancelled and restaurants and bars closed, it’s unclear what’s going to happen to these companies. Reality is that most of these companies cannot survive a couple of months with no revenue.
So it’s not just the stock market taking a plunge. If it were, I would say sign-up for DeGiro and start investing. Not financial advice by the way, just my opinion. Everybody should start investing.
This is where DEGIRO links were.
It’s also real companies struggling to pay wages. It’s also small businesses not generating revenue, therefor cutting spending, therefor hitting other business etc.
This Corona lockdown is pretty scary for that reason alone. But don’t panic. We have been through worse before. Governments are taking measures. The Dutch prime minister addressed all business owners in his speech yesterday and assured “the government is doing what it takes to help you through”.
About Freelancers Specifically
I’m a freelancer. I don’t have to pay salaries because I don’t have employees. My costs are minimal since I don’t rent an office, lease cars, or have purchasing to do.
I have plenty of work to do. My clients tend to be cash-rich companies. But the trickle effect might mean that my business could dry up when my client’s customers spend less etc.
Thanks to sound financial habits I don’t worry too much though. I have a large gap between my income and expenses. I simply don’t spend lavishly, and in the past few years I have been working hard on increasing my income.
If one of my clients would drop me, I could still survive. Heck, I could easily survive on half my revenue. That means that I can lose half my clients, or work for half my hourly rate, and still be fine.
Sure, I might be able to invest less, pay off my mortgage slower, but I would be able to get through.
I don’t have a habit of advising you on this blog. In fact, I try to disclaim everything I write by making sure it’s not taken as advice. But I do have some advice for you in this: get your finances together. You might make enough money right now, but build that gap between your income and expenses. Do it because we never know what might happen. Did you predict this Corona lockdown 6 months ago? Yeah, I thought so. Earn more, spend less, save and invest the difference. It’s that simple. Go.
Oh, and please stay inside if you can, wash your hands, sneeze in your elbow, and limit contact with other people. Let’s not spread this virus too fast. Stay safe out there people!