Hello, this is Jeff Bowers, Certified Financial Planner Professional with Plan2Retire. Today we are going to talk about How to rebuild your finances as we come out of this tough time.
There is little doubt this is a very trying time for many people. We aren’t going debate the effectiveness or justification of the government forced shutdowns over Covid-19 but instead let’s focus our efforts on recovering from this and being better financially prepared for the future. Our hearts go out to the many small businesses that have been forced to close as well as the healthcare workers that are on the front lines battling this pandemic.
During tough times, it’s always a good idea to go back to the basics of money. There are certain laws of money just like there are laws of nature. If you throw a ball up in the air no doubt it will come down, we call that the law of gravity. Well, here are the laws of money.
First you need to Live within your means. Sounds simple enough but we all have been guilty of violating this law of money from time to time. So now is a good time to look at your expenses and think about cutting out the things you don’t really need. Maybe you have a bunch of monthly subscription services that you don’t really use that much or you have habit of leaving the lights on in a room after you leave it or maybe you should refinance your mortgage since interest rates are low. Either way following this rule will reward you now and in the future.
Secondly, paying yourself first. What do we mean when we say paying yourself first? Before you pay your bills, before you buy groceries, before you do anything else, set aside a portion of your income to save. Put the money into your 401(k), IRA or in a savings account.
The next law of money is, don’t put all of your eggs in one basket. You have probably heard this one many times in the past but how does it relate now. Well most retirement plans give the employee the responsibility to direct the investments in their retirement accounts like 401(k)’s. So that can seem really daunting right now with the big moves up and down in the stock market. Just remember don’t put a large portion of your investments in only one type of investment, you want to spread your investments around between stocks, bonds, real estate and stable investments.
Another important law of money is to have a clear idea of the realities of your money situation. What do we mean by that? Well, do you have a household budget? Are you on track to meet your goal of retirement? Do you have enough in a savings account for emergencies? These are just some of the questions that you should know the answer too. If you aren’t sure about these or any other money issues then you should get some help.
Lastly but very importantly have faith that you will get through this. I know it might seem hard to see that better days are ahead when you are facing a layoff or closure of your business but the first battle you need to win is the one inside your head. Just focus on getting through today by taking some action and getting prepared to come out of this in better shape.
So, there you have the five rules of money. If you feel you need help and want to talk just click on the link below in the description to schedule a phone call. Also, if you liked this video please subscribe so you can get more videos like this one.