4 Tips for Financial Wellness in the New Abnormal

Even if you’re not one of the millions affected by pandemic-related job loss or furloughs, it’s an uneasy time when it comes to our finances. With holiday expenses on the horizon, job security to think about, planned and unplanned medical costs looming, bouncing mortgage rates, and even food prices on the rise – now is a great time to revisit your plan for financial readiness in the new abnormal.

I’ve always been a passionate proponent of creating a whole life financial health plan. And given world events over the last 7 months, having a financial plan and continually revisiting it does wonders to reduce the stress in our lives, pandemic or not.

Read on for 4 tips to maintain financial wellness post-pandemic as we move through the holidays and beyond.

Stick to a Budget – Especially for the Holidays

Creating and sticking to a personal monthly budget might seem like we’re getting down to basics, but it really is the most important thing you can do for your financial health. It’s impossible to plan for future costs, save money, determine if you’re really ready to buy a home, or simply know where you stand if you don’t know what funds are coming in and going out of your bank account.

I recommend you take a systematic approach by completing a personal monthly budget worksheet. I have a good one here for download or there are a number of other templates out there that you can customize to work for your finances. Having a budget that you review and adjust, but above all, stick to helps you maintain a clearer picture of your financial health and readiness. It also helps with holiday budgeting for gift-giving, events, dinners out, and other extras.

Bolster Your Emergency Savings Just in Case

As a general rule of thumb, we’re told we should strive to save between 3 and 6 months of expenses in an emergency savings account to help deal with the unexpected. Yet, a BankRate.com survey from 2019 found that only 41% of adults had enough emergency savings to cover a $1,000 emergency room visit or car repair. What’s more, a more recent survey found that 14% of Americans have wiped out their emergency savings amid the pandemic.

It’s hard to save, especially with so much financial uncertainty and job insecurity out there. There are a few strategies that can help make it easier to find the extra income to bolster your emergency fund. I love these tips from ConsumerFinance.gov on how to get systemic in contributing to your emergency fund. Making it automatic by setting up recurring bank transfers you don’t have to manually complete each month helps immensely. Keeping a tight budget can also help you uncover expenses you might be able to reduce or even drop while adding the difference to your savings account.

Don’t Slow Down with Retirement Contributions

I have seen so many articles out there discussing whether or not you should stop contributing to your retirement fund amid our uncertain times. The short answer? No!

That is, if you don’t have to adjust your contributions in order to pay your monthly bills. You can always make adjustments to your strategy, however, by reducing your contribution. You might also want to evaluate and adjust your asset allocation to a risk level you’re comfortable with, whether you have funds invested in stocks, bonds, or stable money market accounts.

It’s important to understand that you will come through the uneasiness of today’s financial state. Fight the urge to withdraw from your retirement account early and pay big penalties (this should be a last resort). Maintain your contributions, even if they are reduced, and once the uncertainty has passed, you can readjust to your previous contributions.

I like these tips from Forbes on how to keep your 401K on track during COVID.

Consider Refinancing Your Home (Before December!)

With mortgage rates at such low historic levels, it’s a real possibility that you can refinance your existing home loan and realize big savings that improves your financial comfort. There’s a deadline you need to know about, however – December 1st, 2020. That’s the day that Fannie Mae and Freddie Mac’s Adverse Market Refinance Fee takes effect. The new fee aims to recoup projected COVID-19 losses of at least $6 billion by adding 0.5% to all loan amounts. This comes out to about $1,400 on an average mortgage, according to the Mortgage Bankers Association.

You can use my refinance calculator to crunch the numbers and determine if refinancing makes sense for your financial situation and get the ball rolling before the deadline.

Let’s Talk Financial Health, Wellness, and Home Loans!

I’m a big believer in creating a whole life financial plan that can take you from paying for your education to purchasing your first home to saving for retirement. While I love discussing home loans and purchasing real estate, I also enjoy sharing knowledge and tips to improve your financial health during the pandemic and beyond. Contact me anytime at 480-313-7103 or sam@mindfulmoneyusa.com.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.