The coronavirus pandemic has highlighted the importance of having a sound financial plan in place. Those who had a sound financial plan going into it may sleep a little easier at night. Now is the time to look for chinks in the armor of your financial plan and find solutions. Below are 4 tips to help improve your finances during the pandemic.
- Update Your Budget:
Keeping expenses low is key to successfully navigating economic uncertainty. Now is a great time to go through your expenses and see what you can cut out to conserve cash. Personally, I have been able to reduce my overall expenses and use those savings to pad my savings account. It is interesting to see how spending in specific categories has changed since the arrival of Covid-19. Most of us will notice cost savings in auto expenses, gas, and travel. Use those savings to increase contributions to your retirement accounts, personal savings, or reduce debt. - Boost Emergency Savings:
The consensus is to have three to six months’ worth of expenses set aside. If you rely on a single income, count on commissions, or own a business then aim for at least 6 months’ worth. Trust me, you will be glad these funds are available to cover loss of income, home repairs, or medical bills. I know savings account yields are nothing to brag about right now, but the saying “cash is king” rings true now more than ever. - Update Estate Planning Documents:
This pandemic has highlighted the power of having the right estate planning documents in place. Are your family, medical providers, and financial institutions aware of who has the authority to makes decisions on your behalf if the need arises? Do you have the necessary insurance policies and legal documents in place to protect yourself and your hard-earned assets? Either way, take a fresh look at your estate planning documents to make sure your wishes will be fulfilled. - Restructure Debt:
With historically low-interest rates, consider refinancing your mortgage. Cutting your rate by even .50% can help you save thousands down the road. However, keep in mind closing costs and length of time you wish to stay in the home before ultimately deciding to refinance. If you are carrying student loan debt, consider refinancing or restructuring to cut interest expenses. There are pros and cons of having federal loans vs private loans. Book an appointment with one of our advisors to help determine which is the best option for you.
These are just a few of many tips to solidify your financial plan. You will be amazed by the peace of mind you will enjoy by having the basic planning essentials covered. Despite the whirlwind caused by Covid-19, you can still achieve your financial goals by focusing on the items you can control.
