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Published: Aug 01, 2020 8 min read
Wenting Li for Money

So far, 2020 has been unpredictable to say (the very) least. And it doesn’t look like the second half of the year or even 2021 can promise a return to normalcy.

With everything so up in the air, it can be hard to make any sort of plans, whether it be a vacation or even a trip to the movie theater. But a financial plan is one you probably want to work on, or revisit, especially if you have been financially impacted by the pandemic. And despite the uncertainty, planning could be a way to reduce some of your anxiety about the situation, experts say.

“It’s sort of taking back that control that you feel you lost when you’re watching the world unravel in front of your eyes,” says Jody D’Agostini, a financial planner at Equitable Advisors.

Reassess your situation

It can be hard to know where to start, so start with what you know. The first thing to do is to figure out how this pandemic has impacted your family’s situation, says D’Agostini. Initial questions may be fairly obvious: Did someone in your family lose their job or are they in danger of losing it? Did anyone take a salary cut?

This could affect how much you want to save in your emergency fund, or continue contributing to your retirement (both of which we’ll get to in a bit).

Then, go back to the basics, she says. Determine what your monthly budget is, and how it might have changed as your life has adapted to the rollercoaster of 2020. (For example, many of her clients say they might never go back to working a full five-day week in the office — that’ll cut down on the cost of professional clothing).

Re-evaluate your priorities

There’s so much to think about, but figuring out what expenses need to remain a priority, and what should be shifted, is key to not getting overwhelmed.

“There’s always information overload around personal finances,” says Mark Reyes, a financial advice expert at Albert, a mobile app which helps you track your finances. “When you combine it with the pandemic and everything going on, there is a paralysis by analysis kind of feeling.”

So he says to sit down and figure out what is really important to you. Planning to buy a car later this year? Then maybe an auto fund needs to stay on your to-do list. Is traveling something you prioritize? Save up for it.

Figure out what your core values are and use the top three to help guide your decision-making, Reyes suggests.

“A goals-based approach will eliminate a lot of the noise.”

Take care of your emergency fund

While a typical emergency fund might cover your expenses for three to six months, D’Agostini is encouraging people to bump that up to nine to 12 months if possible, given how much uncertainty there is about how long the pandemic will continue.

You want to make sure you have enough of a cash cushion to do a thorough search if you lose your current job, D’Agostini adds — “If you have a cushion that’s a year, you’re not going to take the first job that comes across your plate.”

Since you’ve reassessed your priorities, you might have more money to pour into this fund than you thought. Maybe you have a subscription to a streaming service or a gym you’re not using. A good place to start is just checking your credit card bill, and seeing if there is anywhere you can lower or eliminate expenses, says Anjali Jariwala, founder of FIT Advisors. She also likes budgeting apps like Mint.com and YNAB, which categorize your spending.

“A lot of people — until they've sat down and looked at how much they spend — they don’t know how much they’re spending or where the money is going,” she adds.

If you've lost your job, now may be the time to dip into that emergency fund. You may also be eligible for assistance from the government for needs like health coverage through Medicaid and food stamps through the Supplemental Nutrition Assistance Program. And don't forget to apply for unemployment benefits (most states are offering extended benefits given the high jobless rate).

Get your affairs in order

Part of planning for uncertainty is planning for anything that could happen to you, so you should make sure you have certain estate planning documents completed, D’Agostini says. First, a will, which will make sure your money and other possessions will be passed down according to your wishes. And identify an executor who will control your assets throughout the process, pay final expenses and debts and file any estate tax returns, she adds.

Next, identify a health care proxy who can make medical decisions on your behalf if you are incapacitated, and a power of attorney who can make legal and financial decisions (otherwise a court will intercede, which could delay access to your investment and bank accounts), D’Agostini says. A living will is also important — it spells out medical interventions you would or would not support regarding your care so your health care proxy can make right decisions on your behalf.

You may also want to create a revocable living trust, D’Agostini says. This determines how your assets will be handled after you die, but it allows you to adjust or cancel the provisions you put in place at any point. If you fund the trust now, and become incapacitated, your successor trustee can use the funds for your care.

We know, this is a lot. If you’re not able to solidify all of these documents right now, Jariwala encourages people to at least put their powers of attorney in place. You can likely find an online template for doing so (just make sure it’s specific to your state), she adds.

And about those retirement savings plans…

It can be hard to focus on something as seemingly far out as retirement, especially if you’re stressed about basic needs like feeding your family or paying your rent. It’s okay to bump saving for retirement down on your priority list, Jariwala says. If you can get back to saving after your situation has stabilized, it won’t impact your plans too much in the long term, she adds.

But for people who are still employed, you should continue to contribute to your retirement account at least up to your employer’s match if there is one, says D’Agostini — “that’s free money to you.”

And since the amount of risk you can take in your investment portfolios may have changed, make sure to re-allocate if necessary, Reyes says. If you’re closer to retirement, you might want to have a more conservative portfolio (including more fixed income and cash) to protect against volatility. But for younger folks who still have decades to recover from this recession, stay the course, he adds.

“Stick to the plan,” Reyes says. “Have faith in the plan that you've set up.”

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