Let me begin by extending well wishes to anyone reading this. I hope that you are taking the necessary precautions to stay safe during the pandemic and following the shelter in place protocol to help save lives!
Because the majority of us are working from home and/or spending more time online, the opportunity is even greater to focus on finances. After being in the throes of a global emergency, there are several financial lessons that have come to the forefront.
What has the coronavirus taught us financially?
1. Having an emergency fund is a must.
I have delivered countless presentations and consultations urging individuals to establish an emergency fund. Separate from savings, emergency fund dollars are designated for emergency situations. It should consist of 3 to 6 months of income that would cover expenses should you not be able to work or receive a paycheck. Millions of Americans are experiencing financial woes due to the collapse of the economy that the coronavirus has caused. Unfortunately, many have not established an emergency fund.
2. Establish a savings account and consistently contribute what you can.
Save, save, save! I can’t emphasize enough the importance of saving for a rainy day. Cutting back a little on the small luxuries we enjoy from a latte to a new pair of shoes and putting those dollars away can add up over time. Savings provide an extra cushion in times when regular income is not coming in or a major purchase needs to be made. The financial fallout from the coronavirus is a prime example of when savings would come in handy.
3. Invest in travel insurance.
For those of us who love to travel, the coronavirus has taught us that plans can be abruptly canceled. Meanwhile, not all airlines, resorts, cruise lines, travel agencies, etc. are excited about providing full refunds. Going forward, be sure to consider purchasing travel insurance when booking trips. You just never know!
4. Work on improving your credit score.
With the impact that the coronavirus has had on the economy and particularly the small business community, the opportunity to secure low-interest loans has become readily available. However, your credit score still plays a factor in whether you will be approved for the loan.
Use your shelter in place time wisely by identifying ways to improve your credit score. Simple activities like reviewing your credit report and reaching out to creditors to get errors corrected can go a long way in raising your score.
5.Sit down with a financial advisor.
If the pandemic has taught us nothing else financially, let us recognize the value in engaging a financial advisor. As I have shared on many occasions, one does not have to be wealthy to have a financial advisor. If you have a source of income and a W-2, then it makes sense to at least speak with one.
A simple conversation with a financial advisor can start you on the path of establishing an emergency fund and savings as mentioned above. Further, financial advisors can assist with debt elimination, estate planning, and credit score improvement.
The coronavirus pandemic has indeed presented a financial scenario that most would have never imagined. Remember, we are all in this together and must make the smartest financial decisions possible on behalf of our families and loved ones.
I only ask that you keep this column in your files and refer to it on occasion. Should another major financial crisis rear its ugly head, you’ll be better prepared to tackle it! Be well and stay safe!
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*Securities and advisory services offered through Woodbury Financial Services, Inc., member FINRA/SIPC. Insurance services offered through Atled Financial Group 717 B Main Street Schererville, IN 46375 which is not affiliated with Woodbury Financial.