The recent global pandemic has thrust one thing to the forefront in our lives: uncertainty. Uncertainty over whether our health will be impacted or not. Uncertainty over what the fallout will be. Uncertainty over what life will look like after shelter-at-home is lifted. It is a defining moment in all of our lives.
It is easy to be swept away in the current of uncertainty. But along with the worry and anxiety, I think it’s important to ask how the uncertainty will and can shape us in new, profound ways. What has all this time at home taught us about what we enjoy? What do we miss the most? What aspects of the quarantine are we actually comfortable with, and maybe even good at handling?
Maybe you’re wondering what these questions have to do with finances. Well, whatever you value shapes where you put your money, how you use it, how you save it, and how you view it. We can use this time to reflect and ask questions about our relationship with our money. Let’s dig in.
Are you comfortable with your financial foundation?
An almost dead halt in business and an impending recession has probably really driven this question home. How strong do you feel in your current financial foundation? Do the cash savings you have support you sufficiently during this crisis?
Read: How to Prepare for a Recession?
People tend to be very resistant to touching their savings, but this situation is the rainy day we’ve always talked about! If you have savings, now is the time to use the money. Don’t make your life more uncomfortable than it already is. Remember, you have control over how you spend it. Yes, the amount will go down, but you’ll be able to build it up again in the future.
I can’t emphasize enough how having liquidity (readily available cash or investments you can sell) provides you with a significant buffer in times like these. Make sure that you’re not holding onto too much cash savings that could be deployed elsewhere if a worst-case scenario develops.
If you are not feeling so secure, look at the root causes before you freak out. Are you really financially unstable, or is it your fear talking? Is your income being reduced, or are you just afraid that it will be? Identifying concrete concerns are imperative in moving forward with a plan that will help you (and not drive you bonkers). Pinpoint what those are, and ask how they connect with your real life.
Re-examine what’s really important.
As we are all currently on pause, I’m curious about how priorities in your financial life have sharpened. Are you planning for the things that are truly important to you?
Maybe you’ve been saving a significant amount of money in hopes of retiring at a certain age; but the crisis has taught you that you don’t want to just sit at home and live off your money.
Or maybe you’ve realized that you want to leave your current career and find something more meaningful.
Those are huge shifts in perspective—so how can your financial plan reflect them? What do you need to change now to get started?
Focus on what you can control.
No, you can’t have a crystal ball and predict what the stocks will do or when the economy will recover—but you can stop looking at your stock portfolio every day. Understanding the difference between what you can and can not control regarding your money makes the difference in your mindset.
Read: The Power of Incremental Change in Your Financial Life
Are you and your loved ones protected?
Yes, it sounds morbid, but have you checked-in on all your insurance and estate plans? Now is the time to think about how you want your family protected. If they’re not, start the process as soon as possible. Crises like these let us know what kind of protection is a priority. Whether that’s making sure you have enough life insurance, or discussing estate planning for the first time, it’s never too late to start the conversation.
Are you comfortable with the risk you are taking?
Finally, we’ve all seen the decline in the stock market. Has it taken an emotional toll on you that’s simply not worth it? Or have you understood what’s going on, but found yourself surprisingly able to deal with it? The answer will inform how you should be investing moving forward.
With the initial shock of the crisis wearing off, the dust is starting to settle. Where do your questions land? Take the uncertainty of this time and make it work for you. That way, you’ll have an even stronger vision of what you want out of life when the air clears.
Interested in working together? Learn more about my financial planning services!
Jim is a financial advisor and owner of Thinking Big Financial, Inc. Thinking Big Financial is a fee-only registered investment advisor offering financial planning and investment management services. Specializing in working with the LGBTQ Community.
Please read my legal disclaimer here.