10 Proactive Money Steps for these Crazy Times

A major challenge of being in a global crisis is sensing a lack of control. As the coronavirus pandemic has swept across countries, outside authorities have restricted our usual routines. Most of us have lost the ability to go to our workplaces; frequent our favorite restaurants; make the usual choices that define our lives.

This lack of control is particularly disorienting when dealing with money. These last weeks have been full of uncertainty. How long with shutdowns continue? What impact will this have on the economy? How will my situation change? Questions come up that simply cannot be answered yet.

In the midst of it all, there are certainly proactive things you can do to work on what you can control. Here are ten steps you can do right now in the midst of the coronavirus craziness:

1. Revisit your monthly budget. With lifestyle change, it’s likely the home spending plan can be adjusted to accommodate. For some, shifting into a lower gear may be necessary because of a change of income. Categories that may shift most are fuel, dining, and entertainment. Money may be freed up for other projects.
   
2. Give to support community efforts. If you’re fortunate to have stable income during this time, consider donating to nonprofits serving in your area. See if your church has ramped up benevolence giving or emergency support efforts. The charities you normally support will also need continued funding, regardless of their cause!
   
3. Order from local small businesses. Restaurants and brick-and-mortar retail shops are hit particularly hard right now. By ordering carry-out, you support their team and may help ensure they are around when things return to normal. Buying gift certificates is especially helpful, since these places get the income now (without expenses) while demonstrating you believe in their long-term success.
   
4. Bolster emergency reserves. It can be psychologically challenging to use money in emergency savings, even if it was put there for exactly this situation. Those who are living off income from a retirement portfolio may prefer to use their cash reserves instead of investment accounts. Create your plan now for what happens if the emergency fund runs dry. If retired, what part of your portfolio is holding up and can be trimmed? If out of work (and healthy), are there places hiring right now (such as Amazon) that could temporarily provide income?
   
5. Strategically rebalance investments. Making dramatic changes to a portfolio is often unwise in volatile times. Some are tempted to go entirely to cash when they see account values dropping. A wiser step is to stay invested but strategically rebalance accounts back to your target investment ranges. As equities have fallen, most portfolios will have the opportunity to trim other assets and buy holdings currently “on sale.”
   
6. Contribute or convert to Roth IRAs. Now can be a great time to invest in Roth retirement accounts. Since tax deadlines have been extended, you now have up until July 15th to make Roth IRA contributions for 2019 if eligible. If no longer working, converting a portion of your IRA to Roth now will trigger tax for this year, but shift investments into a tax-free vehicle going forward.
   
7. Tax loss harvesting. If investments in a taxable brokerage or trust account can be sold below their purchase price, those losses can be written off (and carried forward to offset future gains). This may sound like a bad investment choice, but the proceeds of the sale can be carefully re-invested to experience growth when the stock market comes back.
   
8. Determine how CARES impacts you. The CARES Act Congress passed last week is the largest stimulus bill ever. Review how the provisions affect your situation. Some of its biggest features are:
   • Rebate checks in the form of a 2020 tax credit advance (phases out at $150k AGI if filing jointly)
   • All Required Minimum Distributions waived for 2020
   • Student loan payments deferred until September 30, 2020
   • Small business loans for payroll, rent, and short-term cash needs (possibly forgivable)
     
9. Revisit estate plans. This may seem a strange task to do now, but can be easily done from home. Another law recently passed with less fanfare may be even bigger in the long-term than the stimulus. The SECURE Act of December 2019 made changes to retirement accounts that change the way inheritances work. Previously made estate plans need to be reviewed to make sure they comply with the new rules.
   
10. Practice spiritual disciplines. This last one is not strictly financial. But often the best thing to do is accept there is a limit to how much is actually in our control. Use this extra time at home to practice exercises we often claim to not have time for, such as reading, prayer, meditation, or journaling. Expressing gratitude in the midst of our times may be exactly what is needed most.

If you’re looking for further ideas on financial projects to work on now, check out our recommended monthly to-dos. Hopefully at least a few of these 10 provide an idea for something you can take action on today.

If you’re needing help with financial planning, contact one of our Wealth Advisors today to develop your personal plan.

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