Take a Breath: How to Prepare Your Finances for the Future

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We are now about 7 months from the beginning of “lockdown” that began in mid-March in Birmingham. The novel coronavirus and global pandemic have brought about such a swift change in just about every aspect of daily life, and there is little known about what the next 6 months to a year will hold. There is much out of our control, which for a planner like me, can be unsettling. When I reframe my thoughts to center on what I can control, I feel calmer and more accomplished.

When it comes to your financial life, now is a good time to pause, take a breath, take stock, and focus on what you can control. We cannot control the full impact of the pandemic on financial markets, public policy, or whether someone chooses to wear a mask. There are plenty of decisions you can make, however, that are well within your control and make a big difference on your financial future. Here is a list of some items that are within your control that you may want to review.

1.     Emergency Fund and Savings

I do not have to elaborate how a sharp and sudden recession can change the course of a family’s life. Even without a once-in-a-lifetime pandemic, other life events, like unexpected medical bills, home repairs, or family expenses can derail a financial plan. If your emergency fund is not adequate, now is the time to take control and set that money aside. A good rule of thumb is 3 months of expenses for a dual-income household and 6 months of expenses for a single income household, although individual situations may vary. Taking control of the emergency fund now to avoid dipping into retirement savings or relying on high interest credit later. Check bankrate.com for the highest interest rates on FDIC-insured savings accounts.

2.     Asset Allocation and Risk Tolerance

We endured a highly volatile stock market earlier this year that lost 33.9%(1) from peak to trough over a span of 33 days. For long term success of your financial plan, it is important to have a plan that you can stick with through the inevitable market volatility. What is your risk tolerance? What are your return needs to meet your goals? How do the two match up? If you do not have a plan already or if your investment plan takes risk that was too much to stomach (or too little to meet your return needs), now is a good time to review it.

3.     Mortgage Rate

Mortgage rates are at an all-time low, and refinancing could save you quite a bit of money both in long-term interest payments and a lower monthly payment. As of October 1st, the average 30-year fixed mortgage rate was 2.88%(2) compared to a 30-year fixed mortgage rate of 4.32% on December 31, 2016. With a remaining mortgage balance of $283,000 (which includes an assumed $3,000 of closing costs) on an original balance of $300,000, a person would save almost $50,000 in remaining interest costs over the life of the mortgage. Additionally, she would also be saving about $3,750 per year with the difference in payment amount.

4.     Estate Planning

Talking about estate planning and advance directives can be very difficult, especially if it involves talking with your parents or your children about potential end of life wishes. While it can happen at any time, the Covid-19 pandemic has highlighted the fact that one can become incapacitated quickly or pass away unexpectedly. If you have never done so, now is the time to meet with an attorney to spell out your wishes at your death for your assets and the care of young children through a will, power of attorney, and advance healthcare directives. Additionally, if it has been more than five years or if you have been through a major life change (divorce, becoming a parent, marriage, etc.) since your documents were updated, it is a good idea to revisit them. Failing to have plans in place only leaves more stress on your heirs if the unexpected happens.

5.     Investment Expenses

Investment expenses ultimately impact investment performance, and that performance impacts the success of your financial plan. Do you know what you are paying for different services? What are the expense ratios of the mutual funds in your portfolio? One of the drawbacks of our industry is an often lack of transparency about what you are actually paying for your investments. Advisors can receive compensation for the investment products that they offer, and they may do so on top of charging an advisory fee for recommending high expense ratio funds. When reviewing your portfolio’s asset allocation, take some time to understand the fees that you are paying as well.


In summary, the global pandemic has highlighted how much in our lives can be outside of our control. By focusing on what items you can impact, you can take steps to check the health of your financial plan.

Important Notes

Investment advisory services offered through Navigate Wealth Management LLC. Navigate also markets investment advisory services under the name Abeona Wealth. The foregoing content reflects the opinions of the author(s) and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct.

All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

(1) https://fred.stlouisfed.org/series/SP500 accessed 10/7/2020
(2) https://fred.stlouisfed.org/series/MORTGAGE30US Accessed 10/7/2020

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