After weeks of financial mayhem you may feel you’ve had enough when it comes to planning for the future. And who could blame you? However, you could miss important financial gains if you prematurely throw in the towel.
Planning for the future can be tricky to navigate under normal circumstances. But with COVID-19 wreaking havoc at every turn, it can be hard to keep a clear head. Unfortunately, it is expected that individuals may lose income, or worse: their jobs. As the economy starts to sputter as a result of constricted consumer spending and social distancing, many will be affected.
Here, CKS Summit Group gives five tips on financial planning during a crisis.
1. Prioritize Bills
Whether your job has been affected or not, look at all your bills and identify which ones are critical and those that you may not need to pay immediately. Be sure to check in with service providers as some may be offering assistance or an option to temporarily skip payments. For example, NY State’s major electric and gas utilities have agreed to not cut power or heat from customers unable to pay their bills during the virus pandemic.
2. Make a Budget
Budget like your future depends on it, because it does. If you don’t know exactly how much money you have coming in and going out each month, you won’t know how much money you need for your emergency fund. And if you aren’t keeping a budget, you also have no idea whether you’re currently living below your means or overextending yourself.
A budget is not a parent – it can’t and won’t force you to change your behavior – but it is a useful tool that can help you decide if you’re happy with where your money is going and with where you stand financially.
BONUS: Financial Calculators… Calculators are also ideal for retirement planning. A good online retirement tool can make crunching decades of numbers and assumptions a breeze. The best tools allow you to understand the assumptions that are being made and to change those assumptions easily. From monitoring Investments to Cost of Inflation, check out the full list of financial calculators here.
3. Take Stock of Your Non-Cash Assets and Maximize Their Value
Being prepared might include identifying all of your options. Do you have frequent flyer miles you can use if you need to travel? Do you have extra food in your house that you can plan meals around to lower your grocery bills? Do you have any gift cards you can put toward fun and entertainment, or that you can sell for cash? Do you have rewards from a credit card that you can convert to gift cards? All of these assets can help you lower your monthly expenses, but only if you know what you have and use it wisely. Knowing what you have can also prevent you from buying things you don’t need.
4. Use Your Emergency Fund.
This is an emergency. So use your emergency fund! If you’re in pre-retirement, it’s worrisome to think about the prospect of losing your job at a time like this. And if that does happen, you may be eligible for unemployment benefits, but generally, those won’t come close to replacing your entire paycheck. As such – whether you’re approaching or in retirement – it really does pay to have a fully loaded emergency fund as the country continues to operate in crisis mode.
5. Keep Up with Personal and Financial Maintenance
If you keep the components of your car, home and physical health in top condition, you can catch and problems while they’re small, and avoid expensive repairs and medical bills later. You might think that you don’t have the time or money to deal with these things on a regular basis, but they can create much larger disruptions of your time and your finances if you ignore them.
The same goes for your broader financial plan. Your retirement savings should be undergoing some healthy hygiene right now, but not any massive changes if you can avoid them. Save, don’t trade too much, and don’t panic. Take this opportunity to organize your finances, set goals, and seek out professional help if you need it. But most of all, do all you can to stay healthy and take care of your family and our community.
Life is unpredictable, but if there’s anything you can do to stave off disaster, it’s to be prepared and be careful. With the right preparation, you can prevent a financial crisis from ever becoming a crisis and only have to deal with a temporary setback.
Please reach out to a member of the CKS Summit team at 586-286-5820 should you have any questions about your retirement planning needs, or more importantly, for fresh new ideas for your retirement income to achieve your long-term goals.