The economic shutdown due to a pandemic wasn’t what we expected when we were buying our 2020 planners. And while some sectors of the economy have since reopened, the world is anything but “normal” these days.
With this much uncertainty, people are struggling with money decisions. Is now a good time to invest? Is the situation bad enough to tap your 401(k) or emergency savings? And what if everything gets worse? So, we’ve got high stress from this previously unknown disease, plus high uncertainty about what will happen next.
Add in the fact that many avenues for getting recharged and renewed aren’t a good option right now. Vacation? Massage? Enjoying dinner with a group of friends? Many people would think twice before doing any of it.
So, what should you do if you feel like you should do something, and yet you are paralyzed when it comes to money decisions?
Focus on what you can control.
To help you narrow down what you can control, let’s look at some of the things that are clearly out of your hands. The markets, the economy, politics, inflation, and government policy. The trouble with these is that they occupy most of the headlines. It’s easy to get stuck on them and feel as though there’s nothing you can do.
If you find yourself in this rabbit hole, consider setting a limit on your media (or social media) consumption. Instead, focus on specific things that you can do in the real world to help your day go better. Make your bed. Cook a tasty dinner. Call a friend.
Think of something small that you can do in direct support of your long-term goals. Yes, the future is unknown. However, deep inside you know what matters to you in the long run. So, pick one tiny positive step in that direction. It will feel good, and it may help you recover the sense of control over your own life.
Here are some ideas to get you started. Double-check your beneficiary designations in your 401(k), 403(b), or your life insurance. Make an appointment to update your estate planning documents. If you are spending less on beauty services or a gym membership right now, set up an autopay to transfer that “extra” money to a savings account.
Remember your emergency savings.
Emergency savings work two ways. When you are financially able to do so, you put some money away for when times get tough. If and when the times get tough, you lean on that money to get you through.
I am noticing people struggle with both right now. With this much uncertainty, it’s hard to save. It’s also hard to pull that money out because you worry that you haven’t hit the really tough stretch yet.
So, take some time to move forward on both fronts.
If your job situation is stable, think of a small amount that you begin to put away now. Don’t judge yourself for it being too small to make a difference. Over time, good habits snowball.
Also, draw a line in the sand. Decide for yourself what would be a valid reason or a trigger to use some of that money. You might even write it down. Once the decision is made, you don’t have to worry about it any more. If and when you cross the line, you will know what to do.
Have a plan for your investments.
There are two questions I hear often.
“Should I get out of the market to avoid losing money?”
And, “Should I get into the market to not miss out on making money?”
My recommendation is to stop playing fortune teller. There’s always a risk when it comes to investing. This year, we have a double whammy: a pandemic in an election year. Nobody can predict the markets with 100% certainty, and many of the old rules have already been proven unhelpful in this unprecedented situation.
If you are worried about your investments, talk to a CPA financial planner. There is no one-size-fits-all answer. Some people need to rebalance their portfolio to correct the stock/bonds ratio that might have drifted out of their comfort zone. Some people need to move a portion of their money out of the market. And some people need to put blinders on, keep on steady, and do nothing differently.
In closing: Know that this crisis will end. I can’t tell you when or how, but we humans have a good track record of solving difficult puzzles. This will be no different. And when we are finally out of this emergency mode, you will be glad to have made small steps that felt good in the moment — and also empowered your future self to have more choices.