You've Taken a Financial Hit During COVID-19. Use These 5 Techniques to Overcome Financial Stress
Beginning in February and March 2020, America, Canada and Europe locked down cities, closed businesses and halted travel amidst the onset of COVID-19. Six months later, we’re still experiencing the pandemic’s global impact in our communities. A record number of people have applied for unemployment in America since March, and millions are still left jobless, behind on their bills or struggling to make ends meet. If you and your family have been financially hit during the COVID-19 pandemic, here are a few things you can do to help handle and overcome your financial stress.
Tip #1: Make a To-Do List
Sometimes the most effective techniques are the simplest. When it comes to overcoming your financial stress, start by putting your to-do list in writing. Creating a clear list of what’s ahead can help it feel more tangible and doable. If you can, start with the easiest tasks and slowly work through your list, checking things off one by one. With a to-do list in front of you, there’s no need to bear the burden of remembering everything in your head. Starting with a list of tasks can help you more effectively build a plan of action.
Tip #2: Try Talking to Someone
While working with a financial advisor is recommended, it can still help to open up to a family member or friend in the meantime. Keeping everything bottled up and to yourself is only going to escalate your anxiety. If you’re able to, talk it out with someone you trust and be honest. Discussing your problems can ease the burden significantly. Your friend or family member may even have some advice to offer or a financial advisor to recommend.
Tip #3: Review Your Spending Habits
Ignoring the situation may be tempting, but putting your financial obligations off will only make them worse. While some financial issues are more complicated than others, taking stock of your current situation can help build a better understanding of where you are today and what needs to happen. This often starts with adjusting your spending and saving habits. When it comes to addressing your current spending habits, there are a few things you can do right away:
- List out every income source you currently have
- Determine your debts (student loans, car payments, credit card debt, etc.)
- Keep track of all your spending manually or using a phone app
- Identify potential spending patterns or triggers (when you’re stressed, right after payday, etc.)
- Determine what changes you can make to your average spending to save more
- Avoid impulse spending
Tip #4: Make a Plan and Create a Monthly Budget
Creating and tracking a monthly budget is a great way to get in the habit of healthier spending - and healthier spending habits mean less financial stress.
To get started on creating your monthly budget, start by:
- Listing out recurring expenses such as gas, groceries, utilities, etc.
- Prioritize contributing to your emergency fund each month
- Set up automatic payments to avoid late fees or interest
- Determine where you may be able to cut down on spending (entertainment, clothes, etc.)
Tip #5: Establish a College Savings Plan
If you have a young one at home, paying for college is likely looming over your head. To ease this large financial burden, take the time now to establish or check up on your 529 plan. This tax-advantaged savings plan is designed to encourage saving for future education costs (such as tuition, room and board, etc.). You and other family members can contribute to the account, which will gain interest over time as you set aside funds to pay for a child or grandchild’s education.
Getting your finances in order is no easy feat. Identifying your main stressors and establishing a plan to address them can make a big difference in how you and your family feel about your finances. If you’re feeling lost, confused or overwhelmed, don’t forget to reach out to a trusted financial professional who can help make sense of your current financial situation.
We are a trusted fee-only financial advisory firm to individuals and small businesses in the Akron/Cleveland area and all across the country. Please feel free to give us a call at 330-836-7000 to schedule an introductory conversation and we'll partner with you to design a business blueprint to navigate through the COVID-19 crisis together. You can also schedule an introductory conversation with us here.
Since 2004, TCM Wealth Advisors has been providing Fee-Only Fiduciary Advice to our individual and small business clients in Northeast Ohio and all across the country.