Disclosure :: This post was not paid for but it was authored by E. Francis Financial, one of our annual Egg Hunt event sponsors.
Financial Strategies for COVID-19 and Beyond
Recent weeks have tested households in extreme ways. While the time to prepare for today may be past, there are still a few tactics one can utilize to navigate our current environment and steps one can take to prepare for something similar in the future.
There is no doubt that different individuals and families are feeling the effects of this pandemic in a variety of ways. Whether your financial picture has been seriously tested, or your main challenge is simply getting through a virtual meeting without your child providing unexpected background entertainment, these tips should be considered by all.
How do I best navigate this current environment?
Examine Needs vs. Desires
In such uncertain times, this can be an especially valuable exercise. The practice of social distancing is likely to force our hand at this, now that stopping to get that extra coffee (or cocktail) and other such discretionary activities are tougher. Still, it’s important to sit down and really evaluate ALL expenses. Look at every dollar that left your account over the last 1 to 2 months and ask yourself, “Was that absolutely necessary?”. If the answer is “no”, consider cutting it out for the next month. The goal here is simply to free up as much cash flow as possible for more essential needs.
Avoid Making Investment-Related Decisions Based Strictly on Emotion
The stock market has been particularly volatile lately. While everyone’s planning is unique, it is generally suggested that any money invested in the stock market is meant for the long term. Now is a good time to remind yourself of that. Additionally, any attempt at timing the market is a fool’s game. What matters most is your time in the market. If you do start to get anxious (which is natural), go back to the plan. Review why you set things up the way they are in the first place and maintain a high level of discipline. Most importantly, lean on your professional advisors and don’t be afraid to ask questions!
Stay Up to Speed With Available Resources and Helpful Information
The most pertinent information for individuals and businesses at the moment is found in the new CARES Act – an economic relief bill passed in response to COVID-19. This article by NPR breaks down some of the general details: https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package.
If you’re a business owner, you’ll find especially helpful answers about the Paycheck Protection Program in this brief fact sheet by the U.S. Chamber of Commerce: https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf.
Finally, if you’re a business owner specifically in the Greater New Orleans region, GNO, Inc. has a number of resources here: https://gnoinc.org/initiatives/coronavirus/.
If You Have the Ability, Support Local Businesses and Other Organizations
If you’re in a situation to do so, continue to support your favorite local businesses that may be getting hit particularly hard by the challenges this virus brings. Consider, also, that many nonprofits may face a loss in funding as a result. Research any organizations that align with your values and consider providing financial support.
How do I prepare for something similar in the future? Here are a few steps…
• Build a budget and track it.
- Know your numbers – what’s coming in and what’s going out at all times. You can build an Excel spreadsheet, download a pre-made one from the internet, or utilize an app (Mint, You Need a Budget, and Goodbudget are a few examples). This crystalizes what resources you have to save and set aside for future goals.
• Establish and maintain an emergency fund.
- A good rule of thumb is to keep a minimum of 3 to 6 months of expenses in a separate, untouched savings account. Closer to retirement? Then it should be more.
• Compartmentalize your savings.
- Know the individual goals you’re saving for and the general timeline attached to each. For example, you should think about the money in your retirement account differently from the money you have in emergency savings. Those should likely also be treated in a different way than funds being set aside for your 3-year-old child’s college tuition and so on.
• Understand risk, your comfort level with it, and how it fits into your planning.
- Long-term investing will typically involve exposing your money to some type of stock market risk. It’s critical that you understand how it makes sense for your particular needs and that you know your own tolerance for risk.
Overall, the best step you can take for you and your family is to have a strategy. Whether you find your ship in the midst of stormy seas or on calm waters, be proactive. Identify and pursue resources. Stay positive.
Looking to learn more? Contact Eddy Jurgielewicz at E. Francis Financial ::
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Eddy Jurgielewicz is the founder and president of E. Francis Financial – a financial planning practice focused on helping growing families navigate the path to their own definition of success. Having been a high school teacher for a few years prior, Eddy brings much of the same skill set into his current role as an adviser – serving as an educator first and foremost. In doing so, he helps provide clarity to even the most complex planning, allowing his clients to feel confident along the journey to achieving their unique financial goals.