Investing

'Get the fundamentals down first' and other expert tips to take control of your finances during the pandemic

In a Facebook Live session, experts from CNBC's Digital Financial Advisor Council shared tips for earning, investing, and more during the coronavirus pandemic.

CNBC's Sharon Epperson hosts a panel on personal finance on Facebook on July 16, 2020. Clockwise from top right: Winnie Sun, Doug Boneparth, Ivory Johnson, Lazetta Rainey Braxton.
CNBC

Money can be very stressful even in the best of times. But over the past four months consumers have had even more to worry about due to the Covid-19 pandemic and its effect on the economy.

This week, CNBC aired a special "Invest in You" town hall, hosted by Jim Cramer and Kelly Evans, to offer guidance to everyday people affected by the pandemic. It featured the inspiring stories of our four Homegrown Heroes selected from over 150 nominees.

During an hour-long Facebook Live to accompany the TV special, CNBC's senior personal finance correspondent Sharon Epperson spoke with four members of the CNBC Digital Financial Advisor Council to answer viewers' questions about all things money.

"Businesses have closed, people have lost their jobs, the stock market has tumbled and recovered, and we don't know when all of this uncertainty is going to end," Epperson said. "For many of you who are struggling to make ends meet, you may have questions that you've never had before." 

Here are four key takeaways from Epperson and the event's featured financial advisors to help you take charge:

'Money is so emotional' — but a plan helps you be rational

People may be approaching their finances emotionally right now instead of logically, as they get swept up in the chaos and are concerned that they might lose everything, says Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management.

"Money is so emotional," he says. "A lot of this stuff is biologically predictable behavior." 

While the neocortex governs rational decisions, the more primal areas of the brain might send us into impractical decisions, Johnson explains. That's why it's important to articulate your goals and come up with a financial plan that helps you make slow and steady progress toward them. With that in play, it's easier to set emotion aside.

"I tell my clients, 'We already have a plan. Let's stick to that plan and try to take the emotion out of it so the neocortex takes control of the situation."

For a 'fail-safe' way to invest, shore up your financial basics

Before you start investing in the stock market, you should determine your financial goals and understand where your money is going each month, says Doug Boneparth, a certified financial planner and the president of Bone Fide Wealth. 

"Understanding something called cash flow: money in, money out," he says. "First build an emergency fund. Then start investing, and look to your retirement accounts first." 

Boneparth, like billionaire investor Warren Buffett, recommends starting with index funds. That lets you bet on the broader market, which has a long-term track record of growth, rather than trying to pick winning stocks. 

By laying that groundwork first, "you'll have a fail-safe way to go into the investment process," he says. "So get the fundamentals down first. Don't feel like there's any FOMO to get in there."

I tell my clients, 'We already have a plan. Let's stick to that plan and try to take the emotion out of it.'
Ivory Johnson
Founder, Delancey Wealth Management

Figure out what 'financial freedom' looks like to you

How you define financial freedom is unique to you, says Lazetta Rainey Braxton, a certified financial planner and the co-founder and co-CEO of 2050 Wealth Partners. "It really allows them to say, 'How can I be my best self without the extra stress?'" 

Ask yourself what you really want, and go from there, she says: "Does it mean X amount in your bank account? Does it mean having zero debt? Does it mean having a home that you can escape to when the pandemic is flaring up?" 

Once you define your goals, start taking steps to get there.

"So maybe you forgo that trip," she says. "And guess what, we're not traveling, so get into that goal of having money in the bank," she said. "You're accelerated now because there are things you can't do: You can't shop like you used to, you can't travel like you used to, so you're moving toward your own financial freedom." 

Create opportunities to earn more money

Answering a question regarding how to save money as a student, Winnie Sun, a certified financial planner and the founder of Sun Group Wealth Partners, says it's smart to find new ways to increase your income.

"Get creative and find ways to bring in extra income," she says. "Because let me tell you, income solves a lot of financial stress."

Sun suggested cleaning out your house and selling unwanted items online. Or you might pick up a side hustle: There are plenty that can be done from home, or in odd hours even with a full-time job.

"This is a chance for you to figure out what you can do that someone will pay you for," Sun said.  "Get really crafty and don't limit yourself to what you think you need to do for your future."

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