Unless you’ve been hibernating in the woods somewhere, you’re aware of the social, emotional, and economic impacts of Coronavirus across the globe. If you’re reading this at any time near when this blog was posted, you’re probably reading this while still at home under mandated quarantine regulations in your community. No one would have ever dreamt that this would be an issue and today, nobody knows what to expect in the near future. We couldn’t have guessed we would all be experiencing this, but one lesson it has taught me is that we must expect the unexpected…we must expect and welcome CHANGE.
An expectation of uncertainty and a corresponding plan to mitigate the negative impacts of an unexpected event creates an environment of activity. Lexico.com defines the word proactive as “creating or controlling a situation by causing something to happen rather than responding to it after it has happened.” By being proactive, we gain control. When we are reactive to life and its events, we are not in control…in fact, we convince ourselves we are victims of our circumstances.
In terms of personal finance, there are steps that should be taken to solidify your ability to respond in negative or uncertain economic times:
- First, assessing where you are across all areas of your financial life is a substantial first step. There are numerous resources available via technology to help you, but a simple written log of your income, assets, debts, investments, etc. and their values/funding levels is a great beginning.
- Second, outline a more detailed assessment of all aspects of your personal and/or business finances. This should include insurance payments, real estate, aspects of your business ownership, etc. A financial professional that you trust should be a valuable resource as they can assist with this process by providing tools to help you determine potential gaps that you have in the planning you’ve done to date.
- Lastly, analyze the shortfalls in your planning and make changes that solidify your financial position for the short and long term. Some changes you decide to make could be: increasing your liquid reserves, reallocating investments, paying off debt to increase monthly cash flows, shift resources to create a liquid investment hedge against future negative economic impacts, etc. A financial professional can assist here as well by suggesting changes that maybe you haven’t considered.
Ultimately, by creating and executing a plan that anticipates and welcomes financial change, we are expecting the unexpected and are able to thrive in conditions that our peers struggle under.