At the beginning of the pandemic, it was hard to measure how great an impact the coronavirus would have on American life. Now that we’ve lived through the pandemic for half the year, we have a better idea of its effects:
- High unemployment
- Lower wages
- Supply chain and international trade disruption
Yet basic market rules still apply, and eventually, the economy will recover, though it will undoubtedly look different. While we all continue to face certain obstacles, you might be asking yourself:
- How should I handle my money?
- What should take priority during this uncertainty?
Need help understanding how to start financial planning when you’re living though a pandemic? Focus Financial is here to answer your questions, help you find resources, and receive the support and professional guidance you need to make the right decisions about your financial future.
Financial Planning During a Pandemic
There is never a one-size-fits-all solution for financial planning. Concerns can vary between generations and within different income brackets. The pandemic has put older people and those with higher incomes years behind on their financial planning goals, while younger people, particularly those with lower incomes, are worried about covering daily expenses or even losing their homes.
Depending on your situation, here are some tips to help with your planning strategy:
Consider What Is (and Isn’t) a Priority
The best step forward is assessing your individual situation and determining your own priorities. Review your income and expenses. Next, list what is most important, and where you can make adjustments. If, for instance, you’re working from home, could some of your gas money go toward your higher grocery bill?
Look at each line item in your monthly financial spreadsheet, move items around, and decide on a plan that best works for you.
If you still have debt, continue paying it off to avoid digging yourself further into a hole. If possible, avoid dipping into your emergency fund unless absolutely necessary, such as due to loss of income or emergency medical issues.
Look Beyond the Budget
This pandemic brings the added uncertainty of how your health may be affected. While budgeting helps lay your financial groundwork, another important aspect of financial planning during a pandemic is estate planning, which determines what kind of medical treatment you’d like to have, and who will be in charge of your assets should you become unable to communicate.
If you’re pre-retirement or retired, your financial planning should also consider the stock market and other variables. If you’re withdrawing assets at the same time that your portfolio is losing value, you end up with less shares available to compound once the market rebounds, so it’s best to rely on cash or to only withdraw low-volatility investments like bonds or CDs, as much as possible.
Remember to pay attention to what the government is doing about retirement accounts, too. Currently, the IRS has increased the amount you can contribute, while the CARES Act earlier this year allowed waivers to minimum distributions, so your money can stay in your account longer.
Get Support and Guidance
As you work through all your questions on financial policy updates and a changing economy, it’s also important to talk to someone you trust. At Focus Financial, we’ll work with you to help you determine your financial goals and make a plan for achieving them.
Find an advisor to get started!