Build a Financial Strategy During COVID-19
- April 1, 2020
- 7 min read
- 40 reads
Over 140 million Americans are being ordered by their governors to not leave their homes. This decision is causing unemployment rates to skyrocket.
Many people are seeing their personal finances dry up due to their workplaces being forced to shut down.
The steps the governments have had to make to control the coronavirus pandemic will affect your personal finances in some way.
It is easy to spend your spare time worrying about how this crisis will affect your personal finances, along with the fear of the unknown effects on the future.
Now is the time to create a financial strategy that will help you not only survive this crisis but thrive in the future.
I have spent the last two years building my own personal financial strategy based on what I truly value. It has helped build my investment portfolio and reduced the amount of stress and fear for the future.
Maybe some of these tips could help you build a financial strategy during this time of crisis.
1. Cover The Basics
Make sure your family and neighbors are safe. Confirm you have money set aside for your basics, food, shelter, and utilities. During this COVID-19 crisis, this is the number one priority.
If you are fortunate enough to have your mortgage paid down or a large emergency fund, you will be sleeping soundly during these uncertain times. An emergency fund is a great start when creating your personal finance strategy.
A few years ago, my husband and I reworked our finances to ensure that our debt load was as low as possible between our home and investments.
Don’t get me wrong I am all for leveraging to build wealth. Lending is an essential part of the formula for risk and opportunity. It helps you get to where you need to be faster, but for us, one thing was vital.
Knowing that we have a home was a critical component to creating financial peace for us. Reducing stress is key at any time of life, especially right now.
Do whatever you have to in the interim to cover your needs. If money is tight, it may be moving in with family, or contact your landlord to negotiate your situation. Be bold and unafraid to find a solution.
Many people will need personal lending during this time. Knowing which lender is best for your situation can be tough. I would recommend using our personal lending calculator. We compare multiple lenders at once, allowing you to find the best loan provider.
2. Build A Vision On Your Values
With the majority of us having to stay home, spend some time considering what is truly important to you and your household. It might be, being mortgage-free, having investments or savings, changing careers if you are unsatisfied, those were definitely some of mine.
Sort through all your ‘likes’ to find what you truly value. We often find ourselves working towards what we like rather than what we value deep down. They sound like similar things but they really are quite different.
As ‘sorority house’ as it sounds, creating a vision board can be an effective way to clarify what you truly value as opposed to what you might just like.
Get as many magazines as you can find, not just People Magazine but a mixture of anything. Find a quiet place, pour a large glass of wine and put on some focus music. Spend some time flicking through pages, and words are cut out anything that stands out. Don’t question why it stands out just do it. Then once you have enough to fill a large sheet of card glue them on. Sit back and take it in. Are there reoccurring themes that stand out to you? Are there pictures of similar scenes that catch your eye? Write them down in a list of values.
In doing this for myself I realized years ago that I don’t value success as being a billionaire for me but I do value being financially free. Mortgage-free, investments paying an income, time to write poems (seriously it was important to me), living by the ocean, being generous regularly.
Seeing this list enabled me to let go of the ‘would like’s’ such as a new car, a bigger house, buying a bigger company. They would all be beneficial but they are likes, add on’s to my true values. They are not things that give me true enjoyment and I don’t class them as true success.
I believe it is vital for our mental health to feel like we are living successfully in some if not most areas of our lives.
Set up your life based on your true values first and the rest will take care of itself.
An example of this is I had a 1956 Chevy Apache. It was in immaculate condition turquoise blue with a white roof. My little blue heeler named Tucker and I would drive down to the beach in the summers to grab a latte and throw the ball around. It was our Saturday thing.
The only way to get to the beach from my house is to drive down the highway for about 5 minutes. Every time I took the Chevy on the highway, it got stone chipped, which continued to devalue the truck. I began to leave it in the garage and take it out for special occasions only. Last summer, I realized I had only take it out four times.
Just over a year ago, I was challenged to question my values and define what success looks like for me. Everyone is different; some people dream of being billionaires; others want a successful stable marriage. Some people dream of paying off their mortgage or retiring early. There is no one size fits all.
Take the time while things are quiet to ask yourself what real success is. What does a fulfilling life look like for you? Build your financial plan out of those values.
One value that stood out for me was the desire to become completely financially free. Early on I had made some sound financial decisions, as well as some significant risks that had paid off.
I realized for us to become entirely financially free, I had too many toys and not enough investments for the long term. Knowing this made the tough decision to sell my Chevy a lot easier.
I came to the conclusion that for me to build up my finances to live out of my true value of being financially free, I need to let some of the other stuff go.
Knowing deep down that I have many more years of cruising ahead of me, I sold my truck to use the money for investments.
Having the money set aside in investments has enabled me to continue to build my portfolio and add interest to my financial strategy.
What do you have that are ‘likes’ but not true values? What can you let go of that will allow you to sleep deeper at night with the peace that you are gaining momentum in life?
3. Remodel your budget
Now that you have identified your actual values consider remodeling your household budget based on them. Are there extras that are nice to have that limit you from getting you where you need to be? Can you restructure the way you buy things to increase saving for investments?
I love coffee! One way I restructured spending was I stopped my twice a day latte buying habit and bought a beautiful Italian coffee machine. It makes incredible coffee, and I save around $3,000 a year on purchase coffee from a café.
Another way we reduced spending was my husband, and I have never had cable. We have been married for twelve years and have never had it.
We decided early on that we wanted to spend our spare time improving ourselves. Ok, he did, I really wanted cable. But after a while, he convinced me that reading books or being intentional with what we watch will add value to our lives.
Don’t get me wrong we still hire movies or watch Netflix, but we are aware of the time wasted watching TV that could be better spent other things.
He’s not a drill Sargent when it comes to money we go out for dinner a lot, we have vacations and weekends away and drink great wine, but we put it in the budget.
We know what we value in life and what we are ok to let go of. Dinner with close friends for us is life building and something we won’t give up.
Cable can be life taking and saying no to that becomes easy when you know where you are headed.
4. Don’t Freak Out With Your Investments
If you currently have investments in the stock market, don’t freak out. Hold onto them, the COVID-19 pandemic will pass, and if history has taught us anything, the market will rise again.
If you have property investments that could potentially be costing you money if tenants cannot pay, hold onto them as long as you can. Keep reworking that budget with your end game in mind. Financial strategies are a long term game plan, not an overnight success approach.
For some creating a personal financial strategy at this stage during the crisis might be too little too late. The whole nation waits desperately for a relief package decision to be made.
Democrats are still arguing over the large corporation bailouts that are included in the 1.8 trillion relief package. Their concern is that the money will not trickle down to small businesses and is an aid for large companies.
Yes, life will change somewhat from COVID-19. That goes without saying. But I encourage you to take this time to find what matters for you and your household. To identify what success truly is for you and to make a financial plan on how to achieve it.
Before COVID-19, president Trump has improved the economy. If there is one thing, he has a proven track record in its successful business. He said on Tuesday, ‘ America will be open for business again soon.” To that, I will raise my glass of panic bought wine, and agree. Cheers.