5 Financial Tips to Remember During COVID-19

1. Don’t let the pandemic distract you from your goals 

It is very easy to put your goals on hold during a time of extreme uncertainty. However, this is an excellent time to reflect on and possibly even realign your financial goals. If you lost your job or fell into an unexpected medical expense, you may be realizing how important an emergency savings account is. Maybe you wanted to pay off your debt this year, but your cashflow is tight. Or maybe you have been putting off meeting with a financial planner and don’t think you can retire this year anymore. Use this negative time to create a positive situation for your financial future. 

2. Don’t spend money to create happiness  

During these times, it is easy to find yourself falling down a deep rabbit hole on Amazon or noticing the flaws of your home, while spending every second of every day inside. It is important to practice self-control when it comes to online shopping and home renovations. Sometimes even waiting a few days before you buy something can change your initial desires. Finally, before you make the purchases, make sure that they align with your goals and your budget. 

3. Reallocate additional savings 

Without the same travel or dining out opportunities as previous years, many people are finding that they have an unexpected positive cashflow. It is important to take advantage of this excess cash in the most optimal way possible. This may include increasing your 401k contributions, opening a Traditional or Roth IRA, opening a brokerage account, increasing your emergency savings, or paying off debt. At the end of the day, the most important piece is that you are saving. The best option will depend on your personal situation and should be discussed with a financial planner. 

4. Take advantage of low rates 

With fixed rate mortgage averages hitting all-time lows, this is the perfect opportunity to refinance your home. As of the week of August 20^th, the average 15-year fixed rate was 2.54% and the average 30-year fixed rate was 2.99%. The last time rates were anywhere close to this was in May of 2013, when the 15-year was 2.56% and the 30-year was 3.35%. When considering a refinance, it is important to consider the break-even time, which is the timeframe it would take for you to make up the amount of closing costs. For example, let’s assume your closing costs were $6,000 and you would be saving an additional $200 a month. It would take 30 months or 2.5 years to break even. So, it would not make sense to refinance if you plan to move within 2.5 years. However, everyone’s situation is different and it should be discussed with a financial planner before any action is taken.  

5. Try not to stress 

Although money is a physical object, we have a strong emotional relationship with finances. It is crucial for your mental health to not stress during times of uncertainty. Five months ago, we never would have guessed that the S&P 500 would be hitting record highs again in 2020. However, times are still tough for many people and might be for the near future. This is a time to trust the financial plans that you have established and take actions based off those plans and not your emotions. If you are worried about information that you are hearing on the news or from a friend/family member, reach out to your financial planner to discuss further. 

 

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Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.