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What Coronavirus Can Remind Us About Personal Finance

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Personal Finance Tips for Someone on a Fixed Income

March 22, 2020

Allison Baines, CFP®

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You may be familiar with the expression, "What goes up must come down". Forbes.com reported on March 16th that the longest bull market in history came to a halt on March 11th, 2020 after 11 years. While your news feeds and favorite stations are all about the markets right now, the current Coronavirus Pandemic can teach us a few important lessons for our overall finances:

  1. Emergency Fund: The common rule of thumb is to have enough cash in savings for 3 to 6 months of your household expenses. While talks of recessions are looming, it's a reminder to make sure your savings levels are up to par. You may be less nervous about losing your job if you know you are able to still pay your bills and put food on the table while the economy recovers.
  2. Know Your Risk Tolerance: While you can never predict an economic downturn or how severe it will be, you can always be sure that there will be ups & downs in the markets. If you are nearing retirement or simply haven't been able to stomach the recent volatility in the markets, aggressive stock investing may not be the best place for you when the market does turn back positive.
  3. Analyze Lifestyle Inflation: Look at your monthly household expenses in relation to your income. How would your bills stack up if you aren't bringing in a paycheck? Now is a good time to analyze your monthly spending to see if there are any subscriptions or monthly expenses you can cut out. Even looking at things like your grocery bill can free up a lot of unnecessary expenses if you really need to cut back.
  4. Refinance Your Home: While interest rates have been relatively low recently, with the Fed continuing to cut rates you may be able to get a much lower interest rate on your mortgage than you have paid in the past. This move could shave off a few years of payments on your home and save you money in the long term.
  5. Keep Investing: If you have a long time horizon, keep investing. You could also look at increasing your investment savings over the short term to take advantage of the recent stock market declines to buy in at a lower price.

Finally: Don't Panic! It's not certain right now if we will enter into a recession, but if you can get prepared for economic volatility it can ease your fears in the long run.

Next

What to do When You Feel Market Whiplash

About the author

a woman in a blue shirt

Allison Baines

Director of First Impressions

Allison Baines, CFP®
Wealth Plan Design Specialist at oXYGen Financial
Co-Host of "They Don't Teach You This" Podcast

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

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