How To Manage Your Finances In A Crisis

How To Manage Your Finances In A Crisis

| May 20, 2020
Share |

Americans have always been resilient, but we have never been put to the test like during this season of uncertainty. In the midst of unprecedented volatility regarding the markets and employment, it’s normal to experience a multitude of emotions, including uncertainty and fear. 

Yes, there’s plenty to worry about—that’s to be expected given the situation. But the key is to worry about the right things.

As most of what’s happening in the world right now is beyond our control, let’s focus on what we can control—like our actions (and reactions). Let’s discuss four actions within your control that will help you manage your finances in a crisis.

Don’t Panic

The first (and arguably most important) step is to stay calm. With all the scary emotions stirring, it’s easy to make rash decisions. But rash financial decisions almost always end in regret. Before making any big decisions, try to look at them objectively and weigh all the pros and cons—for both the short term and the long term. Better yet, speak with a financial advisor who can help you expand your view, see the big picture, and act appropriately. 

Create A Crisis Budget

Desperate times call for desperate measures. Most of us are feeling some degree of financial pressure right now. It’s never a bad idea to revisit your budget and look for ways to cut back until hard times pass. 

The idea of downsizing and living a more frugal lifestyle doesn’t sound fun, but you’d be amazed at how fast humans adjust to new circumstances. Give it a week or two, and your adjusted living conditions will start feeling like the new “normal.”

Stay Diversified

When it comes to investing, we all know not to put all our eggs in one basket. But this applies to income streams as well.

Relying on one source of income to stay afloat is risky business. To minimize this risk, look for side hustles you can do to bring in some extra money (bonus points if your idea is recession-proof and can be done from the safety of home).

Stick To The Plan

Of course, it’s ideal to have a “crisis plan” established before calamity strikes. You’ll be less likely to panic and make any costly financial mistakes, because the financial choices you make during a crisis can make or break your future wealth and security. But if you don’t already have a plan in place, don’t worry; it’s not too late to make one. 

If you’re unsure about how to handle your finances during these stressful times, it would be wise to first speak with a financial advisor. Our team at ClientFirst Wealth Management will show you how to weather an economic storm and teach you exactly how to defend yourself during a crisis. If you’re interested in setting up your own smart financial plan, reach out to me at (501) 603-0406 or ed@clientfirstwm.com. I look forward to hearing from you.

About Edward P. Mahaffy, MBA, CFP®, ChFC®

Ed founded ClientFirst Wealth Management in 2007, after more than 23 years in the wealth management industry. Prior to launching ClientFirst, he spent 6 years as a portfolio manager and branch manager with Raymond James, 6 years as a vice president and portfolio manager with Merrill Lynch, and over 11 years as a financial advisor and fixed-income portfolio manager with Stephens, Inc. 

Designated as a Certified Financial Planner and Chartered Financial Consultant, Ed holds a Bachelor of Science in Business Administration from The Citadel and earned his MBA from the University of Arkansas. He is also a member of the Financial Planning Association (FPA). Ed has had articles published in The Arkansas Banker as well as Barron’s magazine and is a member of the National Association of Personal Financial Advisors (NAPFA). He is also the author of How to Select a Financial Advisor: The Least You Should Know.At ClientFirst, Ed is president and senior portfolio manager. 

Disclosures

The views expressed represent the opinions of ClientFirst Wealth Management, LLC (“ClientFirst”) and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.

Additional information, including management fees and expenses, is provided on ClientFirst’s Form ADV Part 2, which is available at https://adviserinfo.sec.gov/firm/summary/120286.

Share |