Budgeting in a Pandemic
Jay R. Kemmerer
Fiduciary Advisor, Author, Speaker & CEO at Berkshire Advisors, Inc.
Budgeting during a Pandemic Recovery can be a frightening thought, but it doesn’t have to be when you stick to the basics and focus on what you can do with the resources and income available to you. I have some advice and money-saving tips for you to focus on.
a) Don’t Panic. Panic leads to hasty, uneducated decisions. Now is the time to use every penny wisely. If you see prices dropping, and you are looking to invest, make sure you speak to a professional first to assure you are making an informed decision.
b) Be aware of scams. Unfortunately, in times of economic distress, financial predators are prevalent.
- Use your instincts.
- Never donate in cash. Do your homework regarding the reputation of the company asking for donations.
- Ignore any online offers for vaccinations or ads for test kits. At this time they are not available.
- DO NOT respond to any texts, emails, or calls regarding checks from the Government. According to the FTC (Federal Trade Commission), this is what you need to know about the current stimulus scams.
- To read more about COVID-19 related scam alerts, check out this FTC.gov article here.
c) Shop around for lower insurance rates. You could be surprised how much money you could save annually by reducing your home or car insurance premiums.
d) Re-evaluate current subscriptions. Make a list of the current subscriptions you have and their monthly payments, then decide which ones you can live without.
If you still can’t find a way to make ends meet due to COVID-19, the CARES Act has made it possible to withdraw up to 100k out of your retirement, such as your 401(k), without the usual 10% early withdrawal penalty. You do still have to pay taxes on the amount you withdraw, however, you could pay the taxes in a 3-year installment plan, or the bonus offered with the CARES Act is that if you pay back the amount you withdrew within 3 years, you do not have to pay the taxes, nor incur any penalties. You can read more about the details of the CARES Act here.
As a financial advisor, I would like to stress that withdrawing from your retirement fund early should only be used as a last case scenario - and if you do have to, I highly recommend paying back into it within the 3-year window to avoid paying the taxes.
If anything, this Pandemic has really underlined the importance of having an emergency savings fund. I know for many it might not be possible to start an emergency fund at this moment, however, it is something to think about when incomes begin flowing and it becomes possible to start saving again. Until then, focus on the things you can control.
For more, go to jaykemmerer.com.
Fiduciary Advisor, Author, Speaker & CEO at Berkshire Advisors, Inc.
4 年I know that everyone’s budget may be turned upside down depending on their situation but adding safety to what you do have to work with is so important NOW! Stick with what you can Trust!! Be healthy & Safe!!
Having a Money Mentor--a person you trust to share financial information, is very helpful. S/he can help you stop making emotional decisions and avoid scams. This is so important when you're just beginning your financial journey.