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What financial planners learned from the pandemic



Among countless other things, the past year has forced us all to look a little closer at our budgets and savings. During the pandemic, millions of people were connected or lost jobs and had to figure out a way to make ends meet. For those lucky enough to keep their jobs, there was still a sense of urgency to stash every penny if a loss of income was around the corner.

Now that we are approaching the other side of the pandemic, it is just as well a time to take steps towards preparations for the next possible health or economic crisis. To this end, we asked financial experts to weigh in on the lessons they learned from the pandemic, with the idea that their takeaways could drive our own. Here's what they had to say about preparing for your own financial recovery after a crisis.

In this article:

Lesson # 1
: Saving "rules of thumb" may not be enough for a real

Experts have always emphasized the importance of saving for a rainy day, but how much should you have stowed away if there is another COVID 19 pandemic? It varies. "The pandemic showed that one-size-fits-all financial advice hardly suits anyone," said Cody Garrett, a financial planner and founder of Twice Financial.

The general rule of thumb has been to have three to six months' expenses set aside for emergency savings, but that was not enough for many families who experienced job losses and medical bills throughout the pandemic. Going forward, Garrett recommends calculating how much emergency savings you also consider your insurance deductions and discretionary income to find out how much cash would be sufficient to provide financial stability in the event of another long-term emergency such as the COVID 19 pandemic. family, consider the cost of childcare, schooling, and other important factors for your proposed budget.

When it comes to how to start saving, Garrett suggests a unique approach. "Most of us pay our monthly bills and save what's left, but I recommend that families do the opposite ", says Garrett. First put away what you need for short- and long-term goals and then pay your bills with what's left.

Lesson # 2: Where You Save Your Money It Means.

The importance of stopping emergency savings in a secure, non-volatile account is not necessarily a new piece of expert advice. However, the pandemic provided an overly real case study that illustrates why it can be risky to put the bulk of your savings into long-term vehicles.

"Many laid off employees had to distribute investments to meet basic income needs during the pandemic," Garrett said. They were essentially forced to sell at a time when the stock market was falling like a knife.

If you have to withdraw cash while your investment is declining in value, you may receive less money than you deposit. The purpose of creating a proposed budget for emergencies is to have your money there when you need it – which is why it is important to invest in a place that offers stability.

The trade-off for the stability of certain accounts (specifically savings accounts at banks) is that the return is low. But you may find that online banks offer a higher annual percentage return (APY) on accounts than walled banks, so it may pay to shop when looking for where to keep your finance accounts.

Lesson # 3: Unmatched Times is an Opportunity to Reconsider Priorities.

Many people experienced an economic loss during the pandemic, but some saw an economic gain because they spent more time at home and less time spending money on non-necessities. [19659002] "Many of my clients realized how much of their money went to simple admissions before the pandemic," says Landon Loveall, a financial planner at KB Financial Advisors who advises young professionals in San Francisco. After all, money spent on commuting, lunch at work, or dry cleaning can settle, and the pandemic forced people to return to basics.

According to Loveall, now is a good time to review the last 12 months and think. about how you want the next 12 months. Can you continue to live without any of these past expenses? If so, what can you do about it? Can you afford an extra car bill? Would you need to look at hiring child care providers so that you can work from home in peace? Think about what your budget plan would need to include in order for you to continue living your normal life.

Lesson # 4: The way we work and communicate changes – continue or risk staying.

the labor market of the future may not return to exactly what it was before, and that is something that experts say to prepare for. "Many jobs lost in the pandemic will not return and it may be more difficult to find a new job," said Angela Dorsey, financial planner and founder of Dorsey Wealth Management.

If you are still in the workforce, Dorsey recommends that you keep your skills up to date so that you can remain competitive. Thanks to alternative learning options, you may not need to go back to school and take on new student loan debt to do so.

Organizations and associations related to your profession can offer advanced certifications. Udemy is a website that has over 100,000 affordable courses on business, design, marketing and more at affordable prices. Coursera is an online platform where you can take courses from top universities such as Yale and Stanford. Google has recently launched professional certification programs for project management, Google data analysis and UX design on Coursera.

Economic staff also adapts to the changing world. During the pandemic, Julian Morris, financial planner and founder of Concierge Wealth Management, switched to digital communications. "This meant that we strengthened our technical stack so that customers could reach us via apps, text, email, phone, video – you name it – we can be reached there," says Morris.

Now his company provides advice through video conferencing and screen sharing. Action steps are delivered to customers via an e-mail overview. If you have ever considered working with a financial planner but do not have time for personal meetings, you may find that many have opened up virtual options.

Lesson 5: Plan for the future, but also enjoy today.

From childhood we focus on the future. We work hard through elementary school and college to have a good career. We save money during a 30- or 40-year career so that we can eventually retire and go out at sunset in a red convertible.

The pandemic turned these plans on its head. Almost overnight, our focus now focused on our family's health, safety, and well-being. The spread of an unknown disease was a strong reminder that tomorrow (and the future) is not promised.

Matt Reiner, a financial planner and partner at Capital Investment Advisors, said that the biggest shift he has seen from the pandemic is a change in the individual's mentalities – they want more experience spending. "They have seen the fragility of life through the pandemic and want to ensure that they have the ability to live their lives through meaningful experiences."

If you've postponed your family, beach vacation or cross-country drive, being grounded forcibly for a year may have inspired you to iron out the details. Going YOLO (you only live once) and planning all your trips at once can track your emergency savings or long-term savings goals and lead to a financial deficit. However, balancing both desires – short-term rewards and long-term stability – may be possible if you draw up a financial plan.

Budget and save are still the names of the game.

Lessons from the pandemic took some nuance to financial planning, but the most important advice remains the same – everyone needs a budget and some money is sweetened away in savings. When the world reopens, there will be more opportunities for us to experience life again – which also inevitably means spending more. Coming up with a plan for repayment, savings and debt repayment now can help you get the most out of today as you prepare for tomorrow.

Our editorial policy

Haven Life is a customer – centered and fully owned life insurance agency. by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our Editorial Policy

Haven Life is a customer-centric life insurance agency that is supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and your general well-being can be refreshingly easy.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life does not have the right to provide tax, legal or investment advice. This material is not intended to be provided and should not be relied upon for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

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