Having lived through the financial crisis as an early college graduate, there are plenty of financial lessons I learned over this past decade. I plan to write more about my own mishaps along the way, but for now, I am using this knowledge to plan for the coming years ahead. Nothing lights a fire more than the sting of a missed opportunity or a lapse in judgment.
While taking care of your short-term self is still a priority, the window of opportunity during a recession may close before you know it. Take this time to mark your stakes in the ground and anticipate potential windfalls ahead. With more capital than I had in my early days as an entry-level employee, I am using this time to think about how I can secure myself for the next recession (yes, there will inevitably be more) and leverage the rebound when it comes.
Ironically, us humans are not great at being fully present in normal circumstances. But in times of crisis, we get laser-focused on the negatives of our current situation. The next few months, perhaps even years, may still be rocky. But if history is any indicator, we are a pretty resilient bunch.
May Financial Checklist
This month’s checklist is about looking towards the years ahead. Don’t let the short-term setbacks detract you from achieving your long term goals. Here are a few financial moves you may want to consider that can propel long-term success and stability.
1. Leverage opportunities in real estate
The Fed confirmed this past week that they will not increase interest rates until the economy recovers. Low-interest rates give you more purchasing power so if you’ve been thinking about purchasing or investing in real estate, this is a great time to start planning ahead. Once the dust settles, you’ll be equipped to hit the market without risking an impulsive or last-minute decision.
If you’ve been on the fence about refinancing your home or recently had trouble getting in line due to the influx of deals, this news comes as a bit of a breather. Take some time to research interest rates and speak to a few banks. Once the mad rush clears out, you may benefit from more competitive offers. I use Bankrate.com to stay up to date on current interest rates that banks are offering.
2. Take a stake in the market
If you feel fairly secure about your job and have enough funds to get you through an emergency, this may be a great time to consider diverting any extra cash into investments. The market saw a significant rebound from its previous drops in February and March, however, earnings season over the next couple of months and economic data will be more telling of the longer-term impact of the economy. Keep your funds handy for buying opportunities and consider investing via a robo-advisor for a more diversified approach. I use Wealthfront as my investing platform.
3. Re-evaluate your career path
While many companies unfortunately may not survive this pandemic, new ones, along with those who can adapt to future demand will inevitably rise from the ashes. If you have been rethinking your career or have been forced out of it, this is a great time to look ahead and anticipate upcoming trends. Nothing is more fulfilling than being part of a forward-thinking organization that builds the next cutting edge product.
4. Consider life insurance and an estate plan
If there is anything that motivates one to invest in life insurance, a global pandemic combined with a distressed economy is probably it. COVID-19 has reminded us that no one is invincible and that we need to protect our loved ones. Set up a life insurance plan that shields your family from financial setbacks and an estate plan that ensures your assets go to the appropriate heirs. It’s great peace of mind during a time of uncertainty.
A Fresh Restart
Your 2020 resolutions for the decade may be long gone, but the physical, emotional, and mental transformations of this pandemic have probably prompted even more profound goals for the future. As the country begins to open its doors again and you slowly return to life in your own time, don’t let your new motivations fade. Create healthy financial habits that will last you in the years to come and carry you through the rough times ahead.