Ways to help keep financially focused during the pandemicMonday 12 October 2020 | Reading Time: 5 minutes
Whether or not you’ve been affected by COVID-19, it’s important to have a focused plan for your finances. Today’s uncertainty could very well impact your life and your financial security. Here are some ways to help effectively manage your finances during the pandemic.
Assess your spending priorities
How you spend your money is an important part of handling finances in the pandemic. Good spending habits can help your money go further. If you haven't changed your spending habits, now could be a time to reevaluate them by reviewing your purchases. Some of your normal expenses may be reduced in the pandemic, such as travel and entertainment, but you could be spending too much money elsewhere. Here are two ways that could help start reducing your expenses:
- Limit or avoid eating out at restaurants – You could save money buying groceries and cooking meals at home plus limit your exposer to COVID-19.
- Limit your online shopping – Now that you’re spending more time at home, you may feel the urge to purchase items online to keep yourself busy. Make sure you don’t go overboard with your spending.
Pay down your credit card debt
With much of the world on pause, you are probably spending less money on activities, dining, and more. The money you save could be used to pay your debt more aggressively. By reducing your credit card debt, you’ll save in the long run because you won’t have to pay as much interest. Once you pay off one card, you’ll have more money to put toward a second card and so forth. You should also look to transfer credit card balances to a new account with a lower interest rate.
Retool your budget
We’re living in unprecedented times. To navigate the current environment, you might want to reevaluate your budget to ensure you aren’t spending beyond your means. To make a new budget determine what your monthly income is, then calculate your current expenses. Your list of expenses should be as detailed as possible. Once you have all of your income and expenses written down, subtract your total expenses from your total income each month. If your balance comes out negative, you may need to cut back on your expenses or make adjustments. Once you have a budget in the black, be sure to look it over at least once a month to make sure everything is on track. Your financial situation can change, especially in these unpredictable times. \You’ll want to be prepared to adapt your budget to whatever financial situation may occur.
Contact your lenders
The pandemic has made it difficult for people to make ends meet and pay their debts like student loans, mortgages, and more. If you are struggling to keep up, call your lenders, and discuss possible payment options. Many companies and institutions have hardship programs to assist you when your financial situation becomes difficult. Lenders understand the negative effects of COVID-19 and will hopefully work with you to defer your payments or lower your interest rates.
Create an emergency savings
If your job hasn’t been affected by the pandemic, consider bolstering your emergency fund or starting one. Ideally, you should save enough to cover three to six months of expenses, but given today’s uncertainty, you may want to save as much as you can.
Review money-saving resources
Reviewing online resources to help you better understand your financial options in these uncertain times is a good idea. There are a variety of sites that offer resources to protect and manage your finances during the crisis, such as the Consumer Financial Protection Bureau (CFPB). The CDC website also offers up-to-date information on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries.
You may also want to review other methods of securing your finances, such as fixed index annuities, or FIAs, which can provide you guaranteed income during your retirement and without being negatively affected due to market downturns. In other words, the value of the annuity will never decline due to market loss for as long as it is in the FIA and it has the potential to increase. For more about FIAs, visit the Indexed Annuity Leadership Council’s (IALC) new fixed index annuity page. There you’ll find helpful info, like questions you could ask your financial professional about annuities, fixed index annuity pros and cons, and much more.
Meet with a financial professional
If it hasn’t already, the COVID-19 pandemic may have a significant impact on your finances. You may feel overwhelmed or helpless. Consider working with a financial professional, who can assist with planning, savings, retirement, and paying down your debts. If you already have one, do a bit of research and see if they can meet virtually or in a way to help minimize exposure to COVID.
If you don’t have a financial professional yet, you can submit your information through our find an agent page.
Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from your accumulation value for additional optional benefit riders or strategy fees associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.