A pandemic impacts the personal financial planning of most people, regardless of income level. Individuals can take multiple steps to craft a solid financial plan for themselves and their families to ensure financial freedom in the long run. Below is a list of strategies you can employ to sail across the financial impact of a pandemic.
1. Re-examine Your Debt Strategy
Clients should avoid carrying high-interest credit card debts. Most financial advisors, including those from Priority Plus Financial, warn their customers regarding such debts due to the volatile nature of stock markets, which leads to a sharp decline in interest rates. Those with loans may consider refinancing them at lower rates by securing a balance transfer credit. The government may suspend federal student loans during a pandemic, thus offering temporary debt relief to those who haven’t cleared.
2. Increase Your Emergency Savings
Most financial planners advise their clients to have adequate emergency savings to cushion them from the financial impacts of a pandemic. You should set aside up to six months’ worth of expenditure in an emergency account. Due to the uncertainty caused by a pandemic, most financial advisors recommend clients to save up to a year’s worth of expenditure in the fund. Those who are unsure of how to initiate the savings can start by trimming needless expenses and dedicating the cash to an emergency fund.
3. Reshape Your Budget
Craft a solid budget for your family to keep your finances in check. Impulse buys and unplanned spending are bound to occur after a pandemic, and life may become very expensive. Make sure to give your set budget a makeover to cater to essential expenses during the pandemic. It would help if you considered re-evaluating your budget to establish additional ways of conserving cash. People working from home can use the extra funds to craft a financial cushion for the coming months.
4. Invest More if Possible
Most financial experts advise customers against selling their investments following a pandemic. Most people have seen a decrease in the value of their portfolios due to the volatility associated with the stock market. Consider contributing more to other investment accounts, including retirement savings. Historically, the stock market invariably rebounds after some time.
5. Assist When and Where You Can
Consider numerous ways of helping others if you’re in a position to. Find out whether your community has a food bank and consider donating personal protective equipment or groceries to assist those in need. Support local restaurants, cafes, and businesses to provide adequate revenue to help maintain their doors open.
6. Refinance Your Mortgage
The Federal Reserve cuts interest rates following a pandemic to allow people to pay their mortgages once the pandemic is over. The all-time low-interest rates on mortgages enable most people to consider refinancing. Most people take this opportunity to shorten their loan terms to save additional money and pay off their mortgage faster.
The economic downturn associated with a pandemic directly impacts your overall financial planning. Crafting a solid financial strategy in preparation for uncertainty is always possible. Contact a reliable financial expert to strengthen and create a reasonable financial plan to enable you to control your finances.