What goals did you set for your financial plan when 2020 started? Maybe you were going to max out your retirement accounts, contribute a certain amount each month to your kids’ 529 plans or pay off student loan debt.
One thing is certain in financial planning: There will always be changes. At some point, plans will change, emergencies will happen, markets will drop.
So whatever you had in mind for 2020, it’s very likely you’ll have to set different goals now.
I want to reassure you that situations like the coronavirus pandemic are exactly why we recommend setting up emergency funds and building resilience into your portfolio.
Here are a few steps to adjust your financial goals right now:
Adjust Your Financial Plan: Lean on Your Safety Net
In uncertain times, your emergency fund is there to help carry you through. So if you find yourself hesitant to tap into those savings, remember that this is exactly what it’s there for.
If you find that the emergency fund won’t be enough to sustain you right now, see some ideas for dealing with a financial crisis here.
Remember to be cautious with credit. Credit cards may be easy to access, but don’t forget they come with very high interest rates, usually 20% or higher. If you’re looking at any line of credit, look for something with an interest rate of 10% or less first.
Whatever you need to do, remember that nobody has all the answers for dealing with a global pandemic. Don’t feel guilty about needing to use the safety nets you put in place.
Cut back on Extra Payments in Your Financial Plan
If your income has taken a hit, you may need to adjust your expectations for what you can handle.
For example, maybe you were making extra mortgage payments or planning to max out your retirement accounts. It is perfectly acceptable to halt those payments for now.
This is the time to pivot and prioritize. If you’re feeling some financial stress, look at what you can cut from your budget for the time being.
You can always pick them back up when things settle down. But for now, focus on your immediate needs.
Remember This is Temporary
The best way to weather a storm is to prepare as best you can beforehand, and then deal with circumstances as they arise. All storms pass eventually. This one will too.
So don’t beat yourself up over having to make different financial decisions than you would ordinarily. This is a temporary situation due to a global pandemic. Your goal right now should be to do what you need to do to best support your family. When things look a bit more normal, you can get back on track.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes everyone should have access to financial resources and coaching. For more information on the services offered, contact Katie today.