We are taught to expect the best, plan for the worst and prepared to be surprised. And we learn that success and sanity often depend on how we react, respond and adjust to those surprises. Many are facing new challenges as they navigate through a pandemic, social distancing and loss in various ways.
Households may be experiencing some upheaval – two incomes shifting to less, single parents shuffling for time off or additional daycare, helping your child think through college or career choices and more. Here are some thoughts to stimulate discussion in your home and with your advisors for greater financial stability, less stress, and a brighter future for your children.
At-Home Learning – Remote learning has its ups and downs, and we’re uncertain of its future.
- Educators are advising parents to lean into school resources for help with at-home learning as well as considering tutors and academies.
- Routines and schedules help. These include scheduling time to connect with their friends and outdoor activities.
- Appeal financial aid. Your financial situation may have changed. Financial aid may have been based on dated Federal tax returns filed with Free Application for Federal Student Aid (FAFSA) and doesn’t represent your current ability to pay for college.
- Seek refunds. Some schools are offering tuition discounts due to the switch to online learning and others are competing for students. Some are rethinking college and career choices and choosing in-state colleges and trade schools. And maybe this will be a record “gap year.”
Protect and Build Your Retirement – People are facing difficult situations. Businesses have closed permanently, and individuals have been laid off or furloughed. Nevertheless, we’ve got to take care of ourselves.
- 401(k) account values took a hit, but many have recovered with rebounding equity markets. Control what you can control – allocations and savings rates. Re-align your allocations with your goals as needed. If you couldn’t sleep well in March, then now’s the time to shift. Some may temporarily have lower savings (tighter household budgets) so save more in the future. It’s a marathon, not a sprint.
- Build your emergency reserves. We’ve witnessed why we should have money in the bank to cover our household for at least three to six months.
- Retirees should view and revise their withdrawal rates – amounts pulled from retirement accounts. Your savings must last your lifetime.
Improve Cash Flow – This may take creativity and redefining priorities.
- What can you do to improve your marketability or shift your business for the new world? Can you take on a side gig?
- What expenses can you cut or defer? Tax filing is deferred to July 15, however, what if you have a refund due? Work proactively on bill deferment. Lenders, credit cards, landlords and vendors may offer deferment or accommodation for COVID hardship. What aid is available through the government, health clinics and more?
Tapping Savings – Use caution.
- Life’s rich with trade-offs. However, you’re a greater asset when you’re financially and physically fit. Use caution with unexpected expenses from college education to maintaining your lifestyle – can you survive this temporary downturn by making a few sacrifices?
Thankfully, more businesses are reopening, people are getting back to work, children will get back to school and proper medicine will be developed. Meanwhile, we have some adjustments to make – some temporary and others long-term. Secure your future wisely.