On February 5, 2020, Americans’ views on their personal financial situation were at record highs according to Gallup. 59% said that they were better off financially than a year earlier and 74% anticipated that they will be better off in a year.
Fast forward to March 26, Gallup reports “In a little less than two weeks, the percentage of Americans who believe an economic recession is very likely to occur in the U.S. because of the COVID-19 virus has increased from 38% to 61%. . . just 8% think it will not happen.”
3 Steps to take now
Cash management becomes crucial during a recession. In fact, cash flow has dried up for many. It is important to establish a means to stay on top of your account balances. The Federal government is working hard to come up with a relief bill that will rescue some and hopefully stimulate the economy at the same time.
We have always advised to have a an emergency fund of 3 to 6 months of living expenses. These are the times for that to be used if needed. You probably downloaded the eBook on this site, but if you haven’t now would be the time to put such a system in place. We also have a website that will capture spending by category if you need help with that. A good spending plan that can be updated quickly is critical in these times.
A less obvious benefit of a cash management system is the sense of control that it gives you when everything seems out of control around you.
Know what’s going on with your savings and investments. Now is not the time to be burying your head and avoiding the mail. We heard two big questions throughout the market decline in March. 1) Is it time to buy now that stocks are on sale? Or 2) Is it time to turn everything into cash and wait this out? Those are two sides of the same “uncertainty” coin. These questions demonstrate our brain’s tendency to help us survive. Survival probably isn’t in question right now if you have some savings and investments. Protecting what you have is likely a concern and that is okay. Build in some risk controls that go beyond simply re-balancing your portfolio.
Insurance and benefits may be the last thing on your mind right now, but after cash flow and investments, knowing exactly what you have and whether you need more insurance leads to more peace of mind, especially in times like these.
Obviously, having a plan in place before a crisis hits doesn’t take away the crisis, but it certainly reduces the stress caused by the uncertainty of it all. If you have a plan in place, it should be flexible enough to adjust the parameters for the new reality that this crisis has ushered in.
We are here to help you. If you would like to book an appointment, we can meet on ZOOM while we are practicing safe social distancing.
Leave a comment and let us know how you are handling the crisis.