Just as the uncertainty surrounding coronavirus has caused us to make adjustments to our normal day-to-day routine, it’s important to consider doing the same to protect your financial health and wellness. Now more than ever, maintaining and elevating your financial situation is essential to you and your family’s future.
While establishing an emergency fund and/or lowering your debt to income ratio should be your top priority, there are a number of additional strategic money moves you should consider to make this difficult time a little more manageable on your accounts, investments, and peace of mind. After all, it’s only logical to prepare yourself as much as you can for whatever lies ahead.
Keep Investing for Retirement
As my colleague John reminded us in his recent article, it’s important to remain calm when it comes to your 401K and investments. Ask any financial advisor and they’ll likely remind you that investing is a long game. Therefore, you should avoid making any rash investing decisions right now – and that includes pulling back on your monthly 401k contributions. If you’re concerned about reduction to your paycheck, consider radically cutting back on unnecessary expenses and diverting those funds to an emergency fund.
Save with a High-Yield Account
Speaking of emergency funds. Opening a high-yield savings account is a great way to make your money work harder and save more. The account’s superior interest rates make this a perfect option for those looking to start or build their emergency fund. Just keep in mind that many high-yield accounts have limits on the number of transfers you can make in a month and may require a minimum amount.
Additionally, a high-yield savings account is a great way to help you save up for something you can enjoy once life gets back to normal. While it could be something big like a family trip, it could also be as simple as a new mountain bike and gear. Frankly, having a goal and something to look forward to after all this could do wonders for your mental health.
Review Your Insurance Policies
Just like with any major life change, it’s important to talk with your insurance agent about your auto, renters/home, and secondary coverages. Depending on your situation, your insurance agent could help you save some much needed money or provide the additional protection you and your family need. Some notable things to discuss with your agent: your college student moving back home, working from home/driving less, and any recent changes to your income.
Examine Your Health Insurance Plan
Especially during a health crisis like this, it’s important to take some time to acquaint yourself with your health insurance plan. In doing so, you should consider how your existing plan may impact your finances if you or your family get sick or injured. For those with a high-deductible plan, you may want to consider setting aside some extra money or opening up an Health Saving Account to cover any out-of-pocket expenses.
Apply for Life Insurance
While it may be difficult to think about, it’s important to consider the financial implication of passing away during this crisis. Chances are you’ll be fine. However, a life insurance policy can help easy the transition for your family in the event something does happen. And, if anything, consider this an opportunity to finally check this off your financial to-do list.
The same goes for your will. If you don’t have one or haven’t recently updated it, now is the perfect time.
Refinance Your Mortgage Loan
For homeowners, one of the positives to come out of this situation is record-low mortgage rates. If you plan to stay in your home for the next few years, you may be able to substantially save on your monthly payments. Even if you’re only able to shave half a percentage point off your interest rate, it may be worth having a conversation with your lender.
Take advantage of optimal financing options
With federal interest rates on student loans on pause, you have an opportunity to make some major headway on your other loans. Thinking in terms of the debt-snowball method, consider using that extra capital to pay off your smallest debt first. Then apply that money to your next smallest loan. Learn more about the debt-snowball method in this recent article from CUInsight.
Get Relief From Your Bills
To assist with relief efforts, many large national companies are working directly with customers who may be struggling financially. This includes many broadband and cell phone providers, as well as credit card companies like American Express and CapitalOne. While you shouldn’t do this unless absolutely necessary, this may be an option if you need to shift some money around to pay rent and/or a utility bill until your next paycheck comes.
Work On You
Finally, consider taking advantage of your newfound free time to add some new skills and knowledge to your repertoire. From professional certifications to continuing education classes, you now have an opportunity to explore your interests, expand your horizons, and potentially even discover a new way to make money.
When it comes to your financial health and wellness, it’s essential to make sure you and your wallet are prepared to handle circumstances beyond your control. Remember, the personal finance experts at your local credit union are a great resource to help you get started.