COVID-19 FINANCE: FINANCIAL PLANNING DURING COVID-19
Financial planning is always important, even during the coronavirus pandemic. Having your family’s finances in order can make it easier to manage during uncertain times.
Here are some financial tips that you can implement starting today to ease your financial anxiety and start saving money each month – even though we’re in the middle of the COVID-19 pandemic.
WORK WITH A FINANCIAL PLANNER
If you have an IRA or other investments managed by a financial planner already, it is a good idea to schedule an appointment with them to discuss the state of your finances and for guidance on what you should do. They can give you specific feedback and steps to take in your current financial situation.
If you do not already have a financial planner, it might not be possible to find one to work with without having an established account with them or assets to invest.
Learn about how a financial advisor can assist you here.
IMPLEMENT STRICTER BUDGETING GOALS
Staying within a budget is hard. During a time of uncertainty, it is better to try to stay within your budget and save more money than you ordinarily do.
For example, eating 100% of your meals at home during to stay-at-home restrictions in your area is a good way to ditch your dining-out expenses. It’s better to save the money instead becuase you never know when in the future you may need to access that money.
AVOID TAKING MONEY OUT OF RETIREMENT ACCOUNTS
No matter what happens, avoid taking money out of your retirement accounts to tide you over these difficult times.
You may have to pay tax penalties. Plus, retirement accounts need time to grow. In addition, by taking any money out of your retirement account prematurely, you won’t benefit from the compound interest that would have accrued.
Whenever possible, it’s best to avoid withdrawing funds from your retirement accounts, even as a 401(k) loan.
GET OUT OF DEBT
If you are still working, it is worth doing everything that you can to pay off any credit card debt that you may have. If you end up losing your job, that credit card debt will be difficult to manage.
Some credit card companies have lowered credit limits and closed accounts to reduce their own risk. If you carry credit card debt and one of your cards is closed, this will hurt your credit score by increasing your debt-to-credit-utilization ratio.
For this reason, paying off debt if you are still able to meet your other expense needs is a smart idea.
FINANCIAL PLANNING MORE CRUCIAL THAN EVER
The COVID-19 pandemic has been a major challenge for the entire world, especially in terms of the economy.
Many businesses cannot withstand many months of shutdowns and reduced capacity. Most people do not have the savings necessary to overcome such an extended crisis.
By going into the next few months with a financial plan, you can ease some of the financial anxieties that you may face during this time and feel more confident about your decisions. While you can’t prepare for everything, there are steps that you can take.