Millions of people in more than a dozen states and many cities and counties have been asked to stay home as they wait for the coronavirus outbreak to subside. And though some policymakers are optimistic that workers will be able to return to their jobs soon, other experts say it's likely that many, if not most, people will be sheltering in place for weeks, and possibly months.
Not being able to leave the house can mean you have extra time on their hands — time you maybe didn't anticipate having. After all, "this [situation] is well outside the norms," says Lukas Smart, senior portfolio manager at Dimensional Fund Advisors in Austin, Texas.
This could be a good opportunity to revisit or develop a financial to-do list and start tackling some of the tasks you've been putting off. Start with these three smart tasks, experts say, which can put you in better financial shape during and after the outbreak.
"Take the time to create that budget — that's the first item on your to-do list," says Justin Halverson, a financial advisor and retirement income certified professional at Minnesota-based Great Waters Financial.
Roughly 40% of people have never had a budget, according to a 2019 survey from the Certified Financial Planner Board of Standards, a professional group for financial planners. If you're among them, or your previous attempts haven't stuck, use this time to sit down and crank one out. And if you have a budget, it's not a bad idea to revisit it and make sure your spending and saving aligns with your goals, especially if the outbreak has disrupted your income or shifted your expenses.
An easy way to start is to collect your bank and credit card statements, identify your income streams, and categorize your expenses. Then assess how your habits align with a budgeting framework like the 50/30/20 rule, which suggests you allocate 50% of your pay to basic living expenses, 30% to discretionary spending, and 20% to savings and investments.
"You'll have some good data to draw from" if you create or revisit your budget now, says Halverson. Because "odds are, you're not doing a lot of discretionary spending."
"After you create a budget," says Halverson, "figure out a plan to tackle your debt."
The average U.S. consumer owes more than $90,000, including mortgages, student loans, auto loans, and credit card balances, according to Experian. Your goal in developing a repayment strategy is to get a clear picture of how much debt you have, and figure out the optimal way to pay those debts down to save you the most money.
First, make a list of all your debts, including details like interest rates and balances. Note any other key terms, like when a 0% balance transfer offer ends, kicking you back to a higher rate.
Then figure out the best repayment option. Two popular methods are the "snowball" and "avalanche" strategies, which respectively prioritize repaying the debt with the lowest balance or the debt with the highest interest rate.
Video by David Fang
Estate planning involves creating documents including a will, power of attorney, and health care directives. By nature, it involves thinking about uncomfortable scenarios, so many people put it off: Only about one-third of Americans have a will, for example, according to data from Caring.com's 2020 Estate Planning and Wills Survey.
But forgoing estate planning is a big mistake. "You can make the worst investing decisions and come back from it," Jill Schlesinger, a certified financial planner and business analyst for CBS, told Grow earlier this year. But if you put off estate planning and something happens to you, "it's impossible to correct it," she said.
Halverson agrees. "It's not even a question" that you should have your estate in order, even if you're young. For example, someone who has minor children, for example, would benefit from having life insurance and a will naming guardians for their kids.
You can use an app or software to build a basic will and other estate documents. Depending on the service used and your situation, drafting these documents could take less than an hour.
You can also get in touch with a lawyer to guide you through the process. Halverson says that even with so many people at home, "there's likely to be some law firms that will work virtually" to help people out. And there are online notary services that can help you make sure your documents are valid, without your having to leave home.
Taking on these tasks can also help you keep things in perspective as the nation hunkers down. "You need to do a little bit of soul-searching," says Smart, and keep your focus on long-term financial objectives. Those "can actually act as a beacon when you're trying to decide what to do in uncertain times."
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