It’s Bad Credit Education Month at OppU. Click Here to Learn More!
Financial Strategies in the Age of the Virus
If you’ve been checking your emails, you’ve probably had a restaurant chain or pet store inform you that we are in trying times. Unprecedented times, even. As responses to the coronavirus pandemic and the spiraling economy continue to develop, there is a real uncertainty about what financial decisions are safe to make.
Is there any financial advice that still holds true and is likely to apply later, regardless of what happens next week or next month? To find out, we spoke to several financial advisors to find out which financial advice they think still applies in these uncertain times. They told us budgets, life insurance, and emergency funds are still valuable to have and will almost certainly continue to be valuable.
Make a budget (or several)
Making a budget is one of the most important steps to achieving your financial goals. Sticking to a budget, however, is difficult — even if you’re not in the middle of a global pandemic.
Jeffrey Benowitz, a financial representative with Certified Financial Services and Guardian Life, says it’s important to continually review your budget:
Even though the majority of people are self-quarantining, one could get caught spending money by unnecessarily shopping online due to boredom or retail therapy. Try to avoid this if you can. Only purchase what is necessary.
Because sources of income may come and go during this time, whether through additional government payments or additional layoffs, your budget may have to be more fluid than usual. Most, if not all, financial planners will tell you that it’s better to overestimate your expenses versus underestimating them. Err on the side of caution, because that caution is more justified than ever.
Benowitz also recommends taking a second look at recurring expenses that you passively incur without much thought, like a gym membership. If you aren’t going to the gym right now, you shouldn’t be paying for it.
Consider your dependents
While the current situation may cause people to consider their mortality in a way they had not before, every single person who has ever been born will one day die. We hate to say it, but it’s true. And that means life insurance is always something to consider or revisit.
“If someone depends on you financially, odds are, you need a life insurance policy,” says Heidi Mertlich, owner of No Physical Term Life.
Mertlich recommends researching life insurance policies online so you can be responsible with social distancing while you handle your family’s financial risk management portfolio.
Try to build an emergency fund
If you’ve already lost a primary source of income, then you may not have any extra money to contribute to an emergency fund. But any amount you are able to contribute — whether you start now or before the next crisis — will always be a good idea.
“An emergency fund is the first thing every consumer must establish in their financial portfolio,” says Jared Weitz, CEO and founder of United Capital Source Inc. “In any financial state, it’s prudent to have a hearty amount of reserves set aside.”
Weitz suggests trying to build six to 12 months’ worth of living expenses. While that may not be possible to achieve, especially right now, it’s a good goal.
Take control where you can
One of the most difficult parts of financial planning is that you do not know what will happen in the future. For example, you may have created a perfect budget for your financial situation, complete with investment accounts and retirement planning, and then it was all blown to pieces when the world was hit with a global pandemic that shook the economy.
That’s why Eric Roberge, founder of Beyond Your Hammock, says the best financial advice is focusing on what you can control:
We can’t control the overall market reaction to current events and crises, but we [can] control if we stick to our investment strategy and plans.
We can’t control what the overall economy does and how that might impact our individual jobs, but we have the ability to act now and decide if we’ll prepare for an emergency before it happens.
Be willing to ask for help
It’s important to understand that taking control doesn’t mean trying to handle your personal finance issues alone. Now, more than ever, it’s important to be willing to ask for help.
If you have friends or family who are in a position where they are able to help, don’t be afraid to ask. You may end up in a better position to pay them back down the line.
Contact your lenders
If you’re worried about missing credit card or other bill payments, try reaching out to your creditors and explaining the situation. If you can work out an agreement that won’t negatively impact your credit, then you won’t have to worry about late or missed payments bringing your credit score down.
Look into assistant programs
While government programs are currently in an ever-changing state and also may vary by state, you shouldn’t feel ashamed to take advantage of whatever offerings you can. That’s why they’re there. Find out if you are eligible for student loan relief.
What does the future hold?
The bottom line is this: No financial professional, not even a certified financial planner or a high tech robo-advisor, knows exactly how the next few months or even years will go. But this free financial advice may be worth keeping in your back pocket.