Creating A Better Financial Plan

Posted on: 7 December 2020

Financial planning is generally about long-term goals, saving for the future, and deciding what you wanted to do with the money you were able to set aside. However, when things change, your financial planning needs to change as well. For example, in times when everything is unpredictable, such as during a global pandemic, you'll want to be sure that you reconsider your financial planning and reprioritize how you use the cash that you do have. Here's a look at a couple of financial planning things to consider when you want to preserve your financial situation in uncertain times.

Assess Your Current Financial Condition

When times start to get tougher, it can be challenging to know how to respond to what may seem like a rapidly changing environment. Unfortunately, you can't really determine what you will need to do until you can fully understand your current financial situation.

Create a log that details how much you have in savings, where your investment accounts are and their balances, as well as how much your current income will be. This may be different than your usual income if you've been furloughed from work and are receiving partial pay, are on unemployment, or have lost your income source completely.

Consider what kinds of opportunities are available for you to make money as effectively and efficiently as possible. It may mean starting a home-based business, pursuing a dream you've had, or seeking other opportunities. That way, you can take all of this into account to determine how much money you'll need to have for spending and for saving.

Identify And Address Discretionary Spending

In addition to evaluating what money you currently have, including in your investment accounts, the next step is to paint a clear picture of where that money has been going. Review your bank statements, current transaction lists, and any receipts you have so that you can get a full understanding of where you've been spending your money. This helps you to recognize any areas of discretionary spending so that you can reduce that cash outlay. The less money you spend on unnecessary expenses, the more money you will have to put toward the necessities when things are tougher to cover.

Reconsider Your Investments

Investment markets are often volatile during times of financial uncertainty. Take time to look at all of your investments, liquidate any that need to be pulled from the marketplace, and ask your investment manager to shift some of your funds into more reliable, consistent, predictable investment funds. Contact a company, such as Independence Advisors, for more information.