Private Client Group
| October 17, 2020
Financial Planning During Uncertainty
The raising spectre of salary losses has inadvertently led to a rethink upon financial planning goals. With Covid-19 well underway and impacting everything from the economy to everyday life, here are a few financial planning strategies during crises.
1. Understand your budget: This is a good time to prioritize what really matters most. As we’re all staying home during Covid-19, entertainment and food costs have greatly reduced. Beyond essential commodities and utility bills, there has been not a single penny spent. For households surviving on businesses, the spending habits have been left to bleed. The ability of these businesses to employ people, pay salaries, and expand activity is curtailed, creating a negative spiral of loss. This new normal is only temporary; getting a handle on your budget doesn’t have to be. A solid budget can also lead to improved savings, which may be paramount if there’s any income loss from Covid-19.
2. Make sure your protection: Reviewing insurance policies and legal documents, translating them, and providing education about what’s currently active and what’s available. During any period of uncertainty, this is likely the most important aspect of your plan.
3. Importance of Liquid savings: With the healthcare system shaken, job security is a little less stable. It is highly imperative to boost emergency funds by reserving a pool of cash to afford our necessities during events like downturns.
4. Avoid "Buy Now-Pay Later": Be careful with credit card debt or better to avoid using this. It is an unsecured debt which is expensive. Continue to pay off your dues every month in full and do not let them accumulate.
5. Stay Invested, Don’t Panic: The market is down, but it’s not due to a poor economy with underlying defects. Consider keeping invested what’s invested. Losses only occur when the shares are sold, so holding on to your investments and letting the markets bounce back might be the best strategy. You might consider riding the wave of the downturn to capture the coming upswing. No one knows when it will be, but it will happen eventually.
Remember, such a situation is temporary. We will get through this together. Continue to stay grounded, stay the course, and support those around you.