COVID-19 & Financial Planning – Securing Your Future
The COVID-19 pandemic has created challenges for all of us, and the longer it continues, the more we are forced to examine our lives in different ways and alter our habits. The current economic environment creates uncertainty and has forced many of us to take a hard look at our finances. Maintaining healthy personal finance habits amid the uncertainty will help provide peace of mind and potential access to more resources during times like this. Here are a few tips to help you develop confidence in your finances and your future:
- Review your budget
Have a realistic spending plan and stick to it. Identify your needs versus your wants. Review your plan every three months, especially if you experience significant life changes. Involve family members in the budgeting process!
- Review your emergency savings
The foundation of having a sound financial plan and adequate emergency savings is critical for managing life’s unexpected twists and turns. What if your job is eliminated tomorrow, or you incur a large medical bill? Having an adequate emergency reserve to turn to can keep you and your family on track. A general rule is to keep at least three to six months of living expenses saved for emergencies.
- Reduce your debt and loan payments
A potential bright spot in a gloomy time, interest rates are at or near all-time lows. Consider refinancing personal debt by transferring balances to low-rate credit cards or applying for a home equity line of credit to consolidate debt. If you have been personally affected by COVID-19 and need extra cash, talk to your HR department to see if your employer has made any provisions to their retirement plans or other benefits in response to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
- Continue saving for retirement
Uncertain times can require changes to cash flow or savings amounts. If needed, many people will adjust how much they are saving. If you do this, try to only reduce or change your savings amount instead of stopping it altogether. For example, if we reduce our 401(k) contribution, it is much easier to increase it back to prior levels rather than stopping and restarting altogether. Continue contributing at least enough to receive your employer’s full matching contribution if possible.
- Review insurance coverages
Do you have adequate health, life, and disability insurance? What about your property/casualty and liability insurance? Look at your employer’s benefit plans to maximize these opportunities, as they can be great ways to save money and help protect your future.
Take advantage of this time of uncertainty to look at your finances and work to improve your financial position. Don’t feel like you need to do it alone—seek out the help of a CERTIFIED FINANCIAL PLANNER™ to review your personal situation together. Reach out to your BKD Trusted Advisor™ or submit the Contact Us form below today.