It's hard to make plans for the future during an uncertain period of time, and there's hardly been a time more uncertain in the last few years than in 2020. With all the hardship, making sure your nest egg is secure probably hasn't been the first thing on your mind. Even so, it's still necessary to secure the things you have so that the present doesn't totally overtake the future. With that in mind, here are four tips on financial planning in uncertain times.
1. Focus on Assets
Money will always have a place, but when things are in flux, stuff that holds its value is typically more important. Whether you're just taking stock of what you have or planning to invest, owning valuables like gold or jewelry is a fantastic way to passively build wealth in a way that's virtually recession-proof. So long as the demand for an asset holds, the value will also hold. Historically, there's always been a demand for these kinds of things, so you shouldn't have to fear losing if you hang onto them.
2. Set Aside $1
If money is tight as it is for most Americans right now, it might seem like you have no way to save. While putting away lots of cash each month might be out of reach for the time being, try with at least $1. A single dollar isn't much to start with, but if you can keep it up each month or even each week, you'll start to see that simple investment grow over the next several years. This is a simple and easy way to start your financial planning. It might not be the same thing as a retirement fund, but that little extra you'll have lying around after a time would make for a good emergency fund. Most importantly, it's also a good way to feel like you're doing something constructive with your money rather than just spending all of it on the necessities. You could do the same with loose change you get from purchases to help speed up the savings, too.
3. Care for Accounts First
We all have to make tough decisions with regard to what we'll be investing in at one time. If you're in this situation, take care of your existing accounts first before anything else. This would be things like your 401(k) or any type of account or investment that you've already had set up. These are some of the safest investments you have on hand and keeping up with them directly benefits your future self. The tax benefits of plans like this are also not to be ignored and, though it may be a hard choice, are likely better than a small amount of extra money in your pocket in the long run. While there are mechanisms at the moment to withdraw money from your 401(k) and similar without penalty, think long and hard about whether you're willing to risk that investment and potentially retire later than intended before you do anything.
4. Reduce Expenses While Financial Planning
Though it isn't as technical as some of the other tips here, reducing your expenses during this time of uncertainty is a major benefit to your overall financial situation. If your income has taken a hit due to recent events, cutting back can be a good way to get back on track with your original financial plans (or at least get a little closer to what they were before). Coupons, store-brand items, less luxury items; you get the picture. So long as you aren't going too Spartan for your own health, it should definitely help to have a little leftover after a trip to the store.
Financial planning can be difficult in the best of times, but trying to think of the future when the present is so uncertain is even worse. Try out these four tips to get your plans back on track.