Considering all of the anxiety we’ve been dealing with on a daily basis since mid-March, it’s not unusual to feel a bit overwhelmed and quite frankly, a little powerless in the face of the COVID-19 pandemic. This is really the time to become more empowered to handle one of the things you can control to an extent—your financial health.
Here’s our checklist for making sure you are doing as much as possible to stretch your dollars until businesses fully open and you are more comfortable with your earnings, spending, and savings:
1. Know your budget, and stay on budget.
Doing a deep dive into your monthly expenditures is not as daunting as it sounds. But it does start with getting a grip on how much money is coming in and how much is going out. Once you understand that, the trick is to make sure you stay within your spending limits. In other words, this may not be the right time to buy that new iPhone, just because you want to upgrade.
2. Avoid using credit cards, pay with cash or debit cards.
This is especially important today. Interest rates on home mortgages and other loans are at all-time lows. But that is not the case with credit card interest rates. If you must use a credit card, make sure you pay off the balance before the due date.
3. Adjust your W4 withholdings with your employer.
If you need more cash liquidity, one of the easier ways is to change your W4 withholdings. This will ensure more money winds up in your bank account when your paycheck is cashed, and this can always be reversed once your economic situation changes for the better.
4. Reduce your 401k contribution.
Ordinarily, it makes the most sense to maximize your 401k contribution (if your employer offers a 401k retirement plan). However, if you need more money in your pocket today, an effective step is to reduce your 401k contribution each paycheck. How much should you cut it back? Maybe the best guide is to go no lower than the amount your employer will match. In other words, if the company matches up to 4%, then your contribution should continue to take full advantage of the matching amount. Reduce your contribution to no lower than 4% as well. That means you’re still 8% into your retirement account.
5. Don’t make big financial decisions when feeling stress or panicking.
Take a deep breath, step away, and get a second opinion from someone who can help advise you—like Isakov Planning Group!
Whether you have seen your income cut back, you are temporarily furloughed, or applied for unemployment insurance, it is so important to think about your financial health today and for the next couple of months. This checklist can help prevent more serious financial ills.
Contact Isakov Planning Group for more information about any of the items on this checklist and how to stay financially healthy during this outbreak.