You’ve heard it time and time again, but we truly are living in unprecedented times. Managing your money while the Coronavirus pandemic rages on is a challenge, to say the least.
None of us have lived through this before. Many of us are flying blind. We don’t know what next year, or even next month, will look like.
With so much uncertainty, confusion and fear about the future, how do you properly manage your money? Should you make plans when things seem unplannable?
Don’t worry; despite the uncertainty, you can and should make plans for your money. Here are some ways to manage your money during the pandemic:
Managing Your Money: Be Flexible
First and foremost, be flexible. If you’re a big planner, it can be difficult to let go of what you originally had in mind for the year. Maybe you had certain accounts you were going to max out, or some big expenses you’d been preparing for.
A strong portfolio always anticipates downturns and hard times. You should, too. The best way to weather a storm is to be flexible enough to ride it out and pivot when you need to. So don’t be afraid to let go of your January goals to protect yourself and your money.
Re-prioritize Your Goals
After you’ve accepted a change of plans, you should next look at your goals with fresh eyes. Which goals are unrealistic? What should you really be focusing on for the rest of the year?
If your income has changed, your goals will probably need to change, too.
You might not be able to max out your 401(k) because you need to replenish your emergency savings. Or you might not be able to make additional payments on your mortgage or loans.
Make a list of your top priorities so you know where your money needs to go first. Then make some plans for places additional income can go once you have it.
And don’t worry about having to hit pause on some of your goals this year; there will be time later to pick them back up. Just make sure that you do, when things settle down.
Re-allocate if Necessary
Some employees have had their benefits limited during the pandemic. For some people, that means they can’t contribute as much to their retirement accounts, or those contributions have been paused.
If that’s the case for you, you can still contribute to accounts that will ultimately boost your bottom line. Some options include:
- Roth IRA for additional retirement savings
- Health Savings Account (HSA) for reducing taxable income
- Taxable brokerage account for flexible retirement savings
- 529 plan to save for your child’s education and potentially receive a tax deduction
Build Healthy Money Habits
Regardless of what’s going on in the world, it’s always a good time to establish or refine healthy money habits. This is especially true if you or your partner’s income has changed this year.
If you’re feeling out of control with your money, go back to the basics:
- Put together a budget
- Plan out short- and long-term money goals
- Know how much money you want to save for retirement
- Make sure your portfolio allocations are right for you
Remember Everything is Temporary
The history of the markets is proof that eventually, they calm down. At some point, we settle back into something steady and more predictable, whether that happens this year or years from now.
There will always be periods of calm and turbulence. It’s important to remember that when you’re managing your money and making decisions for your financial future.
If you’re struggling with managing your portfolio or concerned about the economic impact to your investments, I can help. Contact me here to set up a call.