Let’s face it, thanks to the COVID-19 pandemic, times are tough right now for many of us. So, it is perfectly understandable if your approach to personal finances is “survival mode” right now. However, as the old adage goes, “this too shall pass.” There will come a time when the coronavirus is under control, and life will return to something that more closely resembles the norm.
Here are three critical tips that you should be doing right now, as best as you can, to get your personal finances ready for the “next normal” after the pandemic.
1. Assess the current state of your personal finances and reprioritize your financial goals
Take a moment to do a thorough analysis of personal finances. List your assets and your liabilities. Consider this your own personal “balance sheet.” Then calculate your net worth by subtracting your liabilities from your assets. Have your financial goals and the priority of those goals shifted during this crisis? Make sure you have a strong savings base, you’re not overusing debt, and maintain positive cash flow as much as possible. This is key to give you the foundation needed in your long-term financial plan. It will also ensure you are as financially healthy as possible in a post-COVID world.
2. Review your current portfolio of investments
Given the current volatility of the stock markets, you may not even want to take a look at your investments and/or your retirement plans. But now more than ever, it is important to stick to your resolve, maintain your retirement and investment strategies, and not make rash decisions because of the impact of the pandemic and the upcoming election on the markets. Also now is the time to review your Will and/or Trust, Power of Attorney & Healthcare Directives. These documents are in place to protect us and our loved ones, and ensure our wishes are carried out. Unfortunately, these documents may come into play if you or a loved one contracts COVID-19.
3. Make any changes you need to ensure your financial plan is on track
After doing the analysis in steps 1 and 2, you may need to adjust your budgeting and/or investment strategies to get your personal finances back on track for a post-pandemic economic recovery.
By taking this approach now, even if you have experienced job loss, or a reduction in income, you will be better prepared to balance your financial life today with your financial life tomorrow.
How has the coronavirus pandemic impacted your personal financial plans? What have you done about it? Please reply using the comments below.
Mike F. Strong