Written by: Michelle Francis, Financial Advisor
If you’re like me, it’s becoming harder and harder not to feel like life is a little out of control. We’re being told not to go to work, if we still have a job, to educate our kids, and to stay home and avoid others. And when it comes to personal finances, there is plenty to be worried about, from how to pay the bills if your income is decreasing, to whether or not to pay down debt, to watching your retirement savings go down. While the conventional advice is to stick to your plan and do nothing, that just isn’t satisfying. As a matter of fact, taking action is a great way to take back control—just do it in the right areas!
1. Pick up the phone and call your financial professional (or find one). First off, a great advisor should have already reached out to you! Any good advisor should be willing to listen to your concerns and fears without judgement. Sometimes, just feeling “heard” can be enough to calm your nerves and keep you from cashing out your life savings. S/he should be able to offer guidance on your financial situation that’s based on research and experience, rather than emotion.
If you don’t have one, find one. Reach out to your friends and family to see what they think of their advisor, talk to your tax accountant to see if they know someone, call the advisor you swapped cards with at a past networking event, or find someone through a referral site or your local chamber of commerce. And if you don’t feel better after talking to yours (or don't hear back!), maybe it’s time to look for someone new.
2. Take a close look at your cash flow. Yes, it's time to mention the "b" word. How you’re currently spending money may or may not have changed much, but either way, now is a great time to review your spending. Maybe you’ve got an old gym or massage membership or streaming service subscription you don’t use or completely forgot about. This time away from spending opportunities might help you realize you're not even missing certain things. Prioritizing what’s important and creating a budget for it actually gives you the power to spend without guilt.
3. Put a worst-case scenario plan in place. If doing this step got you motivated, take an even deeper dive into your money—especially if you’re worried about what might come next. See what items you could live without for a period of time and brainstorm ideas for earning income, without the stress of actually having to make tough decisions based on something like a sudden job loss or reduction in income. Then, if worse comes to worse, you’ll be much better prepared to accept the changes and move forward. Plus, freeing up some cash can get you to the next step.
3. Build up a three- to six-month emergency fund. Saving money at a bank offering a competitive interest rate or in a low-risk product like a certificate of deposit (CD) or money market account and watching your balance grow is so empowering. Online-only banks generally have the highest rates because they don’t have the physical branch office overhead, and many don’t charge fees and low minimum account balances. Local credit unions and regional banks often offer competitive rates on savings, CDs and money market accounts, with the added bonus that you’re helping the local economy.
4. Put a financial plan in place and run a stress test. Without identifying the life goals you want to accomplish now and later, it’s hard to know how much to save, and how long it’s going to take to save it. A financial plan allows you to set goals and see your full financial picture today and in the future. Many financial planning software programs allow you and your financial advisor to run various life and market scenarios (like a coronavirus-induced downturn) to stress test your retirement savings. You’ll be able to find out if you’re at risk of running out of money someday. That vision of your future is powerful—whether you’re on the right track today or need to make some changes for tomorrow.
I hope this inspires you to take some time to take action and get your financial house in order. Feeling overwhelmed or stuck? Reach out to a financial professional today! We’re passionate about offering guidance, especially during trying times like these.