At Guiding Wealth, one recent trend we’ve noticed among our clients is that they’re no longer planning only for themselves. The COVID-19 pandemic has encouraged everyone to look at the bigger picture and take other people into account: parents, children, grandchildren.
Another thing that’s changed? Our clients’ attitudes toward the future. Their priorities have shifted and they’ve become more accepting of the unknown. We’ve loosened our tight grip on that sense of control many of us believe we need to run our finances.
If anything, we’ve learned that nothing is pandemic-proof, and anything can throw your finances for a loop. The best thing you can do for your finances post-pandemic is to accept a level of risk that will always be present, and to plan for what you can. We talk about doing just that in this blog.
Check In With Your 2020 Finances
We’re not quite in the “post-pandemic” phase yet since many of us are still getting vaccinated, dealing with health issues, and generally rebuilding our lives. However, as we’re halfway through 2021, now is a good time to take stock of your 2020 financial year.
Gather your financial statements and review your goals from 2020. Did you meet your savings or budgeting goals? Observe any activity that was out of the norm and write down the reasons for it. Maybe your income is lower or credit card debt higher than usual in a certain month because of unforeseen medical bills, for example.
Don’t forget to check in with your retirement and investment accounts, too. If you withdrew from your retirement accounts early or put a pause on your investment strategy, take note.
How does your emergency fund look? For many of our clients, their emergency fund is a top priority now, not just for unexpected events like the pandemic, but for unpredictable changes in the market, too. We’ve noticed that our younger clients are even bumping up their emergency fund amounts from the typical three to six months of income to nine to twelve months of income.
Make a Plan To Address Your Concerns
Now that you’ve taken stock of the state of your finances, it’s time to craft a financial plan that addresses your concerns. Your new goals are a good place to start.
For example, if 2020 hit your finances hard, your overall goal may be to replenish and rebuild for the future. You might decide to beef up your emergency fund, return to regular 401(k) contributions, and trim unnecessary expenses in your budget so you can comfortably pay monthly bills without stressing over them.
Even if your finances weren’t impacted greatly by the pandemic, they were likely still affected. It’s worth checking in with your budget, spending, and important policies like life insurance, health insurance or homeowner’s insurance, just to ensure that you’re still covered. Making a new financial plan for the months ahead is still a good idea, even if your new plan looks very similar to your old one.
Embrace the Unknown
It’s an uncomfortable truth, but one thing the pandemic taught us is that life is short. Our loved ones, no matter their health or age or lifestyle, can leave us in an instant. We often can’t predict or control the death of a loved one, but we can prepare for it to lessen the blow.
If you haven’t yet written your will, established a trust, or thought about estate planning, now is a good time to do so. Consider where and to whom you’d like your assets to go when you pass on. If you don’t have children, you can distribute your possessions and property to other family members, friends, or nonprofit organizations.
Think about appointing a durable power of attorney agent and a healthcare power of attorney agent, too. Your power of attorney agents will act on your behalf in case you’re incapacitated or unable to make decisions.
Work With an Advisor Who Can Help With Life’s Changes (and Curveballs
Adjusting your financial plans in the wake of the pandemic can be difficult to do on your own. You may not know how to tweak all the moving parts of your financial plan in order to achieve your new goals. A professional financial planner at Guiding Wealth can help. Reach out to us today to get started.