One thing we all know for certain is that we are living in uncertain times.
The COVID-19 pandemic has turned our world upside down and we are each feeling it in very personal ways. One shared concern among many people, however, is the financial impact this public health crisis will leave in its wake. Despite the emotional tornado we’re all living through it’s important to remember that managing our emotional reactions is one of the best ways we can contend with times of uncertainty so that we can come out the other side having made smart decisions based on more than our fears.
For many people, fear is magnified at the moment, especially where investments are concerned. We’re living in a scary time. However, we believe turbulent times call for a calm and cool approach to personal finance, reminding ourselves of the lessons learned from prior crises, and getting back to basics. Although there is much we cannot control right now, it’s a great time to refocus on the things you can.
So, if you’re feeling unsettled about money matters at the moment, channel more energy into these five areas of your personal finances:
1. Review Your Budget
Your budget is the cornerstone of your financial foundation, but it may not always get the attention it deserves. Make time now to check in and ensure you’re sticking to your spending and savings goals and reassess whether your goals have evolved.
2. Cut Unnecessary Subscriptions and Memberships
We are all guilty of failing to cancel recurring subscriptions and memberships we’re no longer using, which means we’re letting our hard-earned money slip away. Take stock of any lingering streaming services, workout apps, magazine subscriptions or other recurring expenses you may have forgotten you’re still paying and cancel them once and for all.
3. Understand Your Needs vs. Your Wants
If you’re feeling unnerved about money right now, harness those uncomfortable emotions and use them as fuel to ask yourself hard questions about your spending. Chances are, while many of your expenses feel like needs, they are actually “wants”. Now is the perfect time to exercise more self-control.
4. Improve Your Financial Habits
We can always improve in the way we manage our money, so think about an area that is ripe for progress. It might be related to one or more of the three items above, or it could be something as simple as talking more with your spouse or children about the family finances or changing your money mindset.
5. Be Intentional with Your Money
All of the above contribute to this concept, but adding more intentionality to your personal financial decisions is really about letting your daily money choices be a product of your previously set goals. So, know your goals, remind yourself that you have smart strategies in place, and refrain from making spur-of-the-moment decisions based on emotion.
A Word on the Market
Using these five steps to get back to basics and avoid emotional financial decisions can help you manage the onslaught of feelings you might be having about the pandemic and its associated economic impact.
Yes, recent weeks have shown us significant market declines, and we can’t be sure how long this increased volatility will last. However, it can be helpful to remember that, like the downturns of 1987, 2001 and 2008, this too shall pass.
Staying the course and maintaining the strategic investment decisions you’ve already made will help you mitigate long-term negative impacts to your portfolio. Making investment changes in an environment of unknown outcomes is a recipe for future regret, and now is not the time to make emotional or fear-based decisions. Instead, focus on what you can control and know that there will be an end to the uncertainty.
If you’d like to discuss any concerns you’re having, please don’t hesitate to reach out. We are always happy to offer professional guidance and reassuring perspective as we navigate this unusual time in our world together.
