Whether you’re bracing yourself for the potential of a job loss, a medical issue or any reduction in your household income, it pays to plan ahead. When uncertainty looms, your income becomes more valuable than ever, so it is a great time to set financial priorities. How do we make our money serve us? Here are a few strategies to be considered.
Prioritize those that you love, including yourself. Take time to sit down and look at “must-haves” like housing expenses, food, utilities, fuel, insurance and debt with collateral tied to it (such as a vehicle). Focus your dollars here first, with an emphasis on housing and what you need to survive.
If possible, save something each month – no matter how little. With uncertain times, having funds in emergency savings is paramount. Don’t worry about the amount. Put away what you can until you have reached a savings goal that will help you sleep better at night.
It might also be a great time to invest in your retirement accounts if possible. Be sure “current you” is investing in “future you”. For long-term investing, like for retirement that is years away, consider whether you can increase your contributions. The stock market has a long history of bouncing back after economic downturns, but volatility can last for years, so it is for investors who can wait for years, not months. Setting aside even a small amount each month toward your future is an act that prioritizes “you.” Just be sure the money you set aside in a retirement account is not money you will need in the short-term, because there is a potential for taxes and penalties if you have to withdraw the money before retirement.
Keep in mind that for emergency savings you want to know that the money is readily available. You can avoid some risk by keeping emergency savings in very safe, accessible accounts. Having a “rainy day” fund set aside, where you know it will all be there if you need it, will help you care for you and your family.
Communicating with your creditors is an important step in making your income stretch. If you need to, contact your creditors and see what plans they may have available to assist you during a challenging time. If you are having trouble paying on-time, then skipping a payment or two through a deferment arrangement, or asking for lower interest rates, may certainly be an option. If you are trying to get an emergency savings fund started, getting approval from a creditor to skip a payment may allow you to build up savings quickly. See how they can help you, and if so, ask for their plan in writing.
Monitoring your credit is more important than ever. Be sure if you are on a deferment plan that payments are not being shown as delinquent on your credit report. Paying attention to your credit and keeping the best possible credit score will allow you to consider options to leverage credit in the future. Taking care of your credit gives you more possibilities for you and your family.
Take care of yourself and your family first. Try to save a little something if possible each payday. Contact your creditors and see how they can help. And know that we have world-class money coaches at MSA to partner with you for solutions that fit your life, regardless of your challenges or goals. We would love to help. Take care, stay safe and invest in you.
Information provided in this article is for informational purposes only and is not intended to offer specific personalized investment, financial planning, tax, legal or accounting advice. We recommend that you consult an attorney, tax advisor or accountant regarding your unique circumstances.
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