Covid-19: Are you financially prepared?

Covid-19. Quarantine. Recession. Terms that we have all heard in the last couple weeks due to this global pandemic that has taken a toll on everyone in some manner. This includes job loss, cut hours, working remotely, or even cancelled birthdays (sorry Aries). Due to the uncertainty of this pandemic and the unknown effects it will have, there has been a lot of fear, especially when it comes to personal finances. I created this platform because I am passionate about helping people on their journey to financial independence. While the uncertainty surrounding the virus may be unsettling, I hope that my platform will allow you to feel empowered to take control of your financial situation. Today, we’ll be discussing three questions to ask yourself about your finances during these trying times. 

Q1: Are there any expenses I can cut out right now? 

List out your “wants” and your “needs”. A “want” is an item or experience that brings you a level of satisfaction that you feel you can’t live without…but you really can! (E.g. netflix, going to the bar, eating out). A “ need” is an item or experience that is essential to your day-to-day life. (E.g. food, water, car to get to work).

One of the major benefits of listing out your “wants” and “needs” is that it allows you to prioritize your spending. Prioritization allows you to reallocate or shift things around on your budget AND eliminate wants and/or needs in times of uncertainty like we are in now. 

Q2: Is my emergency savings healthy?

An emergency savings is an account for money set aside for those unexpected scenarios, including losing your job, medical bills or car repairs. Unfortunately, due to this pandemic there have already been thousands of job cuts and income has decreased in some households. There honestly isn’t a better time than now to make sure your emergency savings is healthy. Many personal finance experts typically suggest having a “standard” 3-6 months worth of expenses saved. If you are wondering how you can beef up your emergency savings quickly, remember to perform the exercise in question 1.

Q3: Are my investments properly allocated?

As history has shown us, investing comes with its “peaks and valleys” depending on what period you are looking at. No matter what type of investment account you have (e.g. 401k, IRA, brokerage), it is important to understand your risk tolerance. If you are not comfortable with the daily 5% (or higher) swings at this point in time, consider the following: adjust your exposure to risky products down (e.g. stocks), decrease the amount you contribute to these accounts for the time being and stop looking at your accounts. If you choose to decrease the contribution to these accounts, think about how you can use that money properly. I personally suggest paying down a high-interest debt that you have or using those extra funds towards your emergency savings. 

Whether you sit down tonight or sometime this weekend, just take a few minutes out of your day to answer these three questions. With that, Dancy With Money wants to help you complete these three questions during these trying times. I want to introduce the free Covid-19 Budget Supplement. This supplement includes a worksheet to help you identify your “wants”/“needs” in addition to an expense analyzer to help you stay on track with your budget in an interactive form. Go over to the products page to download it for free. 

Holding you accountable,

DWM