How to Start Planning for Financial Recovery
The COVID-19 pandemic has impacted each of us. Maybe you are juggling work-from-home duties with 24/7 parenting. Perhaps your small business is struggling to stay solvent after losses from the shut-down. Or you may be one of the many workers who were furloughed or laid off this year. If you are retired, you could be anxious about your investments and fearful of another deep economic crisis.
And we all long for the days when we could attend arts and sports events and travel to see friends and family. We wonder when things will return to normal.
While it will be many months, even years, before we know the full effects of COVID-19, one thing is clear. Now is the time to plan for your financial recovery. Here are five ways you can be ready for whatever our “new normal” may look like by protecting your family’s financial future.
- Evaluate your specific situation. Some people are struggling to pay their bills – maybe for the first time in their lives. Others have maintained their income but are concerned about their economic future. Many people are in between. Take a step back to determine how your finances have been affected by the pandemic. Review your financial records to gain perspective on what you have in terms of debt and savings.
- Consider your goals. Has the pandemic caused you to re-evaluate your priorities? You’re not alone. Some folks are considering moves to be closer to family. Others would like more living space to accommodate a work-from-home lifestyle. Make sure your financial plans accurately affect who you are now and what you want for your family’s future. You may need to carve a new path or make adjustments in your existing path.
- Work on paying off your debt. Once you return to work, it’s time to pay down your debt. Start with your smaller debts first and then work your way up to the larger ones. I also recommend money expert Dave Ramsey’s advice to stop using credit cards.
- Set aside three to six months of living expenses in the bank. Having this emergency fund will give you valuable peace of mind. It helps to have a budget in place first to help you determine how much you need per month to ride out a job loss or other crisis. Of course, this amount is subject to change as your living situation changes.
- Work with a financial advisor. A financial advisor can help you create an individualized strategy to achieve your financial goals. The diversified portfolios we build are designed to ride through tough times like these. One of the biggest challenges you may face is getting back into the market after this current crisis. However, holding on to cash will prevent you from taking full advantage of the economic recovery when it happens. An advisor will help you make the right financial decisions to benefit you and your family now and in the future.
On a final note, if your bank account remains relatively unscathed by the pandemic, please look for ways to help others in the community. If you’re skipping salon haircuts for now, send your stylist what you usually spend. Give that favorite restaurant server the tip money that you aren’t paying now. You can make someone’s day with your kindness.