Whether you worry about contracting COVID-19 or not, chances are you share in the financial stress felt by millions during the last few months.
There are steps you can take today to help put some of your fears to rest. But first, a look at why controlling stress is important.
Tips to manage stress
In the case of the pandemic, the CDC suggests strategies for relieving stress. These include meditating, volunteering, taking breaks from reading the news, eating well, exercising, and using counseling or therapy services if needed.
If you are currently experiencing cash flow challenges and haven’t done so already, reach out to your creditors, and any other financial institution with whom you do business to discuss payment leniency.
The financial checkup
Your next move is to review the money that comes in and goes out every month to make sure you have a firm handle on your cash flow situation to possibly uncover some ways to reduce expenses.
Investors should ensure that their portfolios are well-balanced and reflect their financial goals, time horizon, and risk tolerance. Many investors rely on guidance from a financial professional.
Retirees can create dependable income streams (Annuities, Pensions, in addition to Social Security) to help shelter themselves from volatility. Those in the accumulation phase can establish an emergency fund of 3-6 months worth of expenses held in cash.
While it’s critical to review your financial position, it’s imperative to also address your risk management and estate planning needs.
This includes Disability Insurance, to protect your income if you become too ill or injured to work. If you have coverage through your employer, make sure you’re absolutely certain how the plan works – what % of your income it would replace (60% is most common but can be less) and if it would be taxable. The last thing you need at that point is an unpleasant surprise.
Life insurance is also of critical importance, to protect those who are financially dependent upon you. Be sure to review the coverage you have in place (if any) and make sure it’s up to date. Many times, people set up coverage early on, but don’t update it as life events occur, such as marriage, children, buying a house, etc.
The same concept pertains to updating the beneficiary designations on your retirement accounts, insurance policies, and address overall Estate Planning needs.
Being proactive with your finances puts you back in the driver’s seat, which may not solve all your immediate challenges, but can reveal a path forward to restoring financial wellness and help to manage stress.