In aviation, a holding pattern is when an aircraft maintains its flight path in a designated space while waiting for clearance to land. Most of us can gather the definition based on context clues, but there’s a reason I’ve spelled it out.
I think, for many of us, we’ve gotten stuck in a financial holding pattern. I’ve already written a great deal about the COVID-19 pandemic, mostly as it relates to work, health, and family. I think if we’re honest, though, the economic impact — both broad and personal — is at top-of-mind.
It’s understandable that we would be wary of making moves during this time of uncertainty and crisis. Wherever we turn, there are experts who admit that they just don’t know.
That said, we can’t afford to stay in a financial holding pattern. We can’t wait for “clearance” to plan our futures. Now is the time to dedicate yourself to diligent and strategic money management.
3 Money Management Priorities During COVID Crisis
1) Day-to-Day Money Habits
The now presents us with more than a handful of money challenges. For some of us, it is the fear (or reality) of lost jobs and cut hours. For others, the biggest danger to our finances isn’t our employment status — it’s ourselves.
When we’re stressed and anxious, it’s more tempting than ever to make impulse purchases. The science behind compulsive shopping and shopping addiction comes down to that need to “fill a void” or have a dopamine hit. Some of us shop to bury feelings of anxiety and depression. Others use it almost as denial — if I spend money, I can pretend things are normal. I don’t have to confront reality.
Compulsive purchasing doesn’t have to involve big-ticket items. It can be small, unnecessary things here and there that add up. Nothing will hurt your ability to save money and prepare for the future than poor money management — and that begins with spending habits.
When confronted with the temptation to buy something you don’t need, stop. There are a few things you need to do before you click checkout.
Ask yourself if you already own something that serves its purpose.
Visualize having the item versus having what it costs, in cash, in hand.
Evaluate the necessity and wisdom of the purchase, especially in light of what you can save, spend on essentials, and put towards bills.
The fact is, our world is changing. Even if we haven’t lost jobs or income during the pandemic, reassessing and improving daily spending habits will improve your long-term financial outlook.
2) Long-Term Investment Decisions
It’s difficult to feel secure in making long-term investment decisions when there is so much unknown. How can you pick the right investments when you don’t have any idea how the market will react to this crisis? How do you know what will be a good investment?
First things first: don’t put your long-term financial plans on hold. Remember, the housing market and the economy move in cycles. We might be facing the unknown, but that doesn’t mean that what we know is gone.
While we don’t stop planning for the future, we do want to be prudent in making our moves.
Prioritize investments with a proven track record. For example, real estate is known to be one of the best investments you can make for building long-term wealth. It, too, is a fairly predictable and reliable investment to make. When you have the right team of experts supporting you and guiding your decisions, it can offer you peace-of-mind!
(For further reading on investing in real estate, check out REI Nation.)
3) Bolster Retirement Funds
All of us, in some way, have had our retirement savings impacted by the COVID-19 crisis. It’s been nigh-inescapable. With new regulations and laws in place for relief, there might be a temptation to take money out of your 401k.
I think this is unwise. I understand we may feel the need to dip into extra funds to get by — but remember that pulling from your retirement comes at a cost. Not only will you owe taxes on anything you take out, but you will be damaging your long-term financial position.
This should be a last resort.
Instead, revisit your budget. If you can work in more savings, more going towards retirement, your position will improve in the future. We need that preparedness — not short-term comforts. For most of us, we can make the necessary sacrifices — and financial decisions — to recover what has been lost.
How are you prioritizing financial well-being during this time? Share your strategies in the comments.