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We’ve Got You – Financial Steps Through COVID

Posted By Bridget Venus Grimes for The Money Confidante, Tuesday, July 14, 2020

Many of us have more on our plates than ever. In addition to the challenges posed by COVID-19 on our personal lives, there has been much upheaval in the legal world and we’ve been called upon to adjust almost every aspect of how we conduct business. We are going to look at steps you should take now, to make sure you stay on track financially.

 

For many, income has changed. You may have had your pay cut, your bonus deferred, your promotion put on hold. Here is what you should be doing now if your income has been impacted:

  • Now is the time to use your emergency fund. This should be three months of fixed expenses for dual-income households, and six months of fixed expenses for single-income households.
  • Look at refinancing your debt or consider forbearance. Contact your loan service providers to understand all options. Special consideration is given for student loan debt.
  • Reduce extra savings or debt payments. Try to continue to contribute to your 401k if possible, but cut if you must. If you are paying debt down quicker, now might be the time to pay only what you need to.

This is the time to conserve cash, since no one knows what the next quarter or two might look like financially. You can take these steps to prepare for financial uncertainty:

  • Review your budget. Know where you are spending money and where you can cut expenses. Consider stopping savings for retirement, education, any discretionary goals if you are concerned about money.
  • Consider alternate sources of income. The CARES Act provides for financial relief. This could mean taking distributions from your retirement funds, applying for the Payroll Protection Program, or any number of tax relief options the Act provides for. There is a lot provided for under the Act, so read up on this, or contact us and we’ll share a worksheet we have.
  • Take steps as a business owner to conserve cash. Talk to your bank and negotiate lines of credit, talk to vendors to negotiate payments, and speak to clients to encourage payment quicker. Do a full review of your business budget to look for places to cut expenses.

If your financial life has been disrupted, this is a good time to organize it. I know you don’t need any more to do, but knowing what you have will help you see what needs to be addressed to be financially secure. We suggest these steps to organize your financial life:

  • Know where everything is and what it is worth. If push comes to shove and you need to access cash, know which of your accounts are options here.
  • Make investment moves to stay on track. Now might be the time to rebalance your 401k and investment accounts. Given the volatility in the stock market, make sure your accounts are still on track and in line with your appetite for risk.
  • Protect yourself and your family. Nothing like a pandemic to make sure you have adequate life insurance and up to date estate planning documents.

We wanted to end on a positive note, so we focused last on opportunity. As the saying goes “every cloud has a silver lining.” There is opportunity in disruption. How can you pivot in business? What personal financial opportunities now exist from this pandemic? You may want to explore these opportunities to enhance your financial security:

  • Explore professional opportunities. For attorneys, the fallout from COVID-19 will lead to increased opportunities for employment law, bankruptcy law, family law, securities and corporate law. The CARES Act itself is creating complications on many levels, which will present opportunities created by a more virtual workforce, enforcement of social distancing at businesses, etc. Think of how your business can pivot to address these new needs.
  • How you think about your retirement journey may have just changed depending on your age. Revisit where you are on your retirement journey to make sure your plan is on track, your strategy is aligned with your goals, and your savings is on track.
  • Explore other financial opportunities that have presented themselves, such as Roth conversions especially if your income has dropped. The CARES Act also allows for changes in charitable giving, use of your Flex Spending account, and more. 

The planner in me knows that taking the time to position yourself now to weather this storm can set you up for financial security. Rather than dive in to all the steps, pick the one or two that are most important to you, and focus on those. If you have any questions, please reach out to us. And as always, if there is a particular topic you’d like us to cover, please let us know.

Editor’s Note:
On May 5, 2020, a group of women financial planners held a webinar for Lawyers Club of San Diego members on the most important financial moves to make now, given the financial issues presented by COVID-19. Their goal was to arm attendees with the tools needed to make smart financial moves now, looking at financial security on the other side of this pandemic. If you would like further information, you can contact The Money Confidante, or click here to watch the full one-hour webinar (this post details the webinar highlights, in the order the material was covered in the webinar).

Bridget Venus Grimes is President of the financial life planning firm WealthChoice, and is passionate about helping women attorneys make smart financial choices and live the life they want.

 

 

Tags:  corona  COVID  crisis  finances  financial  financial security  health  income  income money  pandemic  planning  preparation  savings  the money confidante  wealth management 

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