You’re already well versed in the basics of personal financial planning: Spend less than you earn, and invest and save wisely. Create a plan that sticks to those fundamentals to help you attain your financial goals and you should be set, right?
But sometimes our best laid financial plans don’t go according to plan. This is the case for many as they’ve tried to figure out how to navigate the rough financial waters of a global pandemic. Retirement savings have taken a hit, cash flow has been tighter than ever, and many have had to dip into their emergency funds.
It’s all brought the importance of a strong financial plan into sharp focus. Whether you’ve been affected a little or a lot, you’ve probably thought a great deal about the financial impact of the crisis. With that in mind, here are three positive trends you might want to consider as you look ahead to your future financial situation and legacy.
Trend #1: Putting one’s financial house in order
Because the coronavirus caught everyone unaware, it caused many to realize how unprepared they were — not just in terms of savings (which notably spiked early this year), but also in terms of organization.
A solid financial plan ensures that physical documents are up-to-date and properly stored and shared. Make sure your plan is in writing, and safely store it in a secure, fireproof, waterproof box, along with important financial documents and other key information, such as:
- Net worth statement
- List of assets and accounts, with account numbers and access information
- Insurance policies
- Financial statements
- Workplace benefits
In addition, now is a good time to review and adjust your living will or advance healthcare directive and power of attorney, as well as beneficiary designations in wills, trusts, investment and financial accounts, annuities, and insurance policies.
Trend #2: Using technology to stay on track
Budgeting and banking apps saw breakout growth last year, up 71%. And with the breakout of the coronavirus, there was a 35% increase in time spent on finance apps in Q1, per a recent study.
While technology is no replacement for a relationship with a trusted financial advisor (especially when it comes to your long-range goals and investing), there are a number of tried-and-tested apps that can help you keep an eye on your day-to-day finances and see how you’re tracking toward certain goals.
There are a number of apps geared toward saving more money or helping you avoid paying more than you should. Look for technology that helps you:
- Automate saving
- Avoid banking and other fees
- Find the lowest price before making a purchase
- Save on prescription drugs
- Find subscriptions and other services that you didn’t realize you were still paying for
Trend #3: Strategically delaying retirement
Many professionals were about to shut the door on their working phase and enter the retirement phase when the pandemic hit. One survey says that 26% of Americans may postpone retirement plans due to the current crisis.
While this sounds bleak, if you’re in the camp of those who are on the cusp of retirement age, but are instead considering working longer, it could actually be a boon to your finances beyond the short term.
For starters, working for an extra year or more can add extra financial padding to your retirement accounts. And because required minimum distributions have been waived for 2020, if you don’t require those distributions for income, that money is still working for you. Plus, if you’re 66 or older, you can suspend Social Security payments while you’re still working and receive a higher monthly payment when you start payments at age 70 (an increase of 8% for each suspended year).