Everything going on this year has created a different perspective for most of us. Not just with our jobs, travel and kids’ schools either. It has had a direct impact on our finances. In a big way! And because of this huge shift in our world, it would be extremely beneficial to take a good look at our finances. Ultimately, it is possible to use the COVID-19 pandemic to increase our long term financial health. So, here are 6 financial moves you can make during the pandemic to get you there.
1. Revisit Your Budget
Revisiting your budget is the first financial move you should take to potentially improve your financial health. In fact, it is extremely beneficial to talk about your budget regularly anyway. But, even more so during a crisis like this.
When you revisit your budget, it is a good idea to hone in on how much your basic cost of living has changed to. As well as how much more you are spending on groceries than you may have been previously. Due to everything that is going on, your basic numbers are bound to have shifted. I know that ours have, in quite a few categories.
And because of that, there are categories that we aren’t spending as much money in now. If that money doesn’t need to be spent, that can be used to increase our savings.
2. Increase Savings
If you find yourself in this position after revisiting your budget, then increasing your savings is the next best financial move to make. After all, most of us don’t have a fully-funded emergency fund. Even though now is the time to make sure we do because of all the uncertainly.
The best place to start is to figure out all of your monthly expenses and multiply by 6. While the numbers vary, 6 months is the number that a lot of people tout. We have found that number is the minimum we are comfortable with. However, we prefer to keep our emergency fund at a higher level, whenever possible.
No matter where you are at with your emergency fund though, it’s never too late to start. And if you have any extra money in your budget, this is the first place you should put it. Just be sure to discuss the level you are both comfortable with first. This way you will know when to move on to the next step towards overall financial health.
3. Pay Down Debt
Paying down debt can be extremely daunting. It is not only highly important to your overall financial health, but debt can directly affect your mental health also. Since we already have so many things going on that can affect our mental health right now, getting rid of debt can only help our state of mind.
Once you have an emergency fund you are comfortable with, then tackling your debt should be the next natural step in your plan. There are many different ways you can choose to attack your debt. But two of the most common are the debt snowball and the debt avalanche methods.
When we tackled our debt, we chose to follow the debt snowball method because it was the method most comfortable for us. But, each of us is different. So no matter which method you choose to pay off your debt, just make sure it is a method that works for you. Because if the method doesn’t feel comfortable to you, then your chance of slipping and not getting the debt paid off get higher.
4. Invest in Retirement Accounts
If you are in a place where you have a fully-funded emergency fund and have paid off your debt, then congratulations! You are in a much better position than most of America. And this means that any extra money you have after revisiting your budget can potentially go towards investing in your retirement accounts.
Even if you don’t have a retirement account set up yet, now is a great time to start putting money in. The market has been doing some crazy things due to COVID-19. But, whenever the market is down is a good time to put money into it. Especially if you have a longer time horizon for your money to grow.
So, if you have a 401k with your employer and haven’t been maxing it out, you should certainly take this step first. After that, I would consider investing in a Roth IRA with your after-tax money. This way you won’t have to pay taxes on any of your contributions when you withdraw them in retirement. After that, consider maxing out your HSA, if you have one. And last, but certainly not least, open an investment account to trade on the stock market with your after-tax money.
No matter which type of account you choose to invest in, the plan is to help boost your retirement. Which is a much better use of your money than so many other options out there.
5. Refinance Your House
One of the biggest pieces of financial news out there today is about refinancing your home. Mortgage rates have been at all-time lows. Some under 3%! This is absolute insanity. And could potentially save you thousands on interest over the life of your loan.
So, if you haven’t refinanced lately, it might be a good time to take a look at rates and different lenders. Different lenders can offer a variety of perks, so it is best to check around before landing on one particular lender. In fact, there are a few lenders out there that are touting no closing costs on mortgage refinances right now. If you can find one of those, I would highly consider refinancing. Especially if the rates are this low. Your future financial self will thank you!
6. Apply for a HELOC
If you have already refinanced, or don’t need to, then there may be another option for you to consider. Applying for a HELOC is a slightly easier process than refinancing a mortgage. And, you don’t have to pay interest on any money you aren’t using in the HELOC currently. This is one of the reasons why I love having a HELOC!
While the interest rate on HELOC’s are higher than traditional mortgages are, there are so many things you can do with them. My favorite thing to use them for is home renovations to help increase the value of my home. Plus it makes spending so much time in my home that much more enjoyable for me and my family.
Another great thing you could do with a HELOC is to purchase rental properties. We have done this and plan to use the properties to help fund our retirement since they will be paid off well before we plan to retire.
No matter what you choose to do with a HELOC, make sure that it will help benefit your future self financially. Because then it will be well worth it!These are some awesome financial moves you can make now to help your overall financial health! Click To Tweet
Great Financial Moves to Make During COVID-19 Summary
Overall, there are some really great financial moves you can make now to help boost your overall future financial health. But, 6 of our favorite financial moves to make during COVID-19 are:
- Revisit your budget
- Bulk up your savings
- Pay off your debt
- Invest in retirement accounts
- Refinance your house
- Apply for a HELOC
If you follow these steps, you can help to solidify the security of your financial future. And during this time of unrest and uncertainty, something like this can help bring you piece of mind. Which is something all of us could use a little more of right now.
What financial moves are you planning to make now to help your overall future financial health?