How to Handle Finances After COVID-19
Since the early part of 2020, we have seen that Americans were shockingly underprepared for any emergency. What we thought was a stable economy is fragile and small acts can tip it off balance causing ripple effects throughout communities and the nation. So, how do we go forward? How do we become stabilized that should the economy shut down again, we aren’t as affected as we were here in 2020? The answer to these questions starts at home and not with our government.
Get Your House in Order
Have a dream, make a plan, and get on a budget. Yes, budget, the dreaded word. You need to know where your money is going and allow it to leave only with your permission. Most people think that when they are on a budget, they have zero fun and never see their friends or go out to eat again. That is simply not true. By all means, have fun, but just plan the limits of your fun. If you go out to dinner with friends, be aware of how much you are spending and limit the splurge.
The ultimate goal is to have as little debt as possible and to build a healthy emergency fund. Emergency funds were something that we lacked at the start of COVID-19. Ready.gov suggests that most people have three to six months of expenses put away to cover emergencies. If you are looking for an excellent plan to follow, Dave Ramsey has the seven baby steps proven over the last 30 years. Though his plan might seem simple, it is the best way to get out of debt and move forward with your life.
Take Advantage of Retirement Plans
The government suggested that we take money out of our retirement plans to cover expenses during the COVID crisis; however, this is the last thing that we should be doing. If you take money out of your retirement, you are stealing from your future self. Most people want to retire comfortably, and some even want to retire early. You cannot achieve your goals if you don’t let your money work for you inside your retirement savings.
As things return to normal, or “the new normal,” if an employer offers a retirement plan such as a 401(k) or 403(b), take it, and if they offer a match, even better. However, during the COVID-19 crisis, companies cut their employer match to save on costs while the economy was in an upheaval. While a company match is excellent, please don’t depend on it; you need to save for your retirement with purpose and for yourself. To find out exactly how much you need to save to retire comfortably, some excellent online retirement savings calculators are available. It must calculate the inflation rate, current savings, average return rate, and typical salary increases.
Work with a Professional
It is a great feeling when you have someone in your corner, especially when it comes to finances. Some financial professionals talk down to their clients to pressure them into investing in specific products. Find a professional that you can trust and is willing to teach you about financial products and services. You don’t have to become a client with the first financial professional you talk to; this is your chance to interview them and determine who you will be partnering with to invest.
