These are hard days. COVID-19 has taken more than 100,000 lives. The public-health lockdown to contain the coronavirus has pushed the unemployment rate to Depression-era levels. The police killing of George Floyd in Minneapolis has led to civil unrest across the country.

Yet investors seem impervious to the turmoil and pain. Analysts largely agree the main factor behind investor optimism is the belief the Federal Reserve will do what it takes to keep the markets functioning. Support also comes from the realization that America’s high-tech titans will emerge from the COVID-19 crisis more powerful than before. Many investors seem to harbor hopes that the rebound will be quick and fast.

The Wall Street analysis has the aura of conviction, yet I find it far from comforting or convincing. Yes, a year from now we could find out that the optimists were right. Yet I can’t dismiss the historic insight that bubbles always seem crazy once we have the benefit of hindsight. Then we wonder, “how could so many people be so stupid with their money”?

More importantly, I don’t think corporate America can profitably thrive considering the long-term trend toward growing inequality and stagnant to declining incomes for a majority of Americans. Too many people are living precarious financial lives these days. Widespread discrimination by leadership in hiring, training and promotions decisions are undermining society. Without concerted action — not words — we will all be the poorer.

This means households must emphasize the basics of personal finance. Here are what I think are the four keys to managing household finances well, especially now.

First, save more and slash debts. A margin of safety protects you against downside risks and also allows for sensible risk-taking. Second, keep it simple. Complex financial strategies cost more measured in time and fees. They usually disappoint, too. Third, embrace frugality. Examine your spending habits and focus on emphasizing the activities and experiences you value. That’s frugality.

Finally, embrace giving. When we give our money away and volunteer our time, we ask the right question: How can we make a difference?

The combination of conservative consumerism, keeping it simple, building a margin of safety and putting giving at the core of managing household money feeds off, reinforces and draws energy from each other — whatever the stock market may or may not do in coming months.


Chris Farrell is senior economics contributor for “Marketplace” and a commentator on Minnesota Public Radio.