The arrival of COVID-19 not only altered the way we live our daily lives, but it’s also changed the finances of most Americans in some way.
From lost jobs and business closures to monthly spending declines—due to the fact that social distancing made it impossible to participate in many pre-pandemic activities—there are few individuals who have not seen their financial situation change in some way. Given this reality, now is a good time for most people to revisit their wealth management plans and determine if any changes or modifications are necessary.
One of the most important parts of wealth management is knowing what your ultimate goals are, and then laying out a solid plan to reach them. That means determining where you ultimately want to get to in retirement, and also where you stand now. In both cases you want to look at the most holistic picture possible.
When it comes to retirement and your future goals, think about everything from the lifestyle you hope to live to what you hope to leave behind for children, family, or nonprofits you hope to support. Also consider any unexpected expenses you might incur down the road—such as long-term healthcare costs. So today, it’s important to look at your collective financial holdings and determine what impact, if any, the pandemic had on them.
While the virus may have negatively impacted your finances, it’s also been a major wakeup call for many regarding spending habits they may want to permanently change moving forward. When social distancing necessitated everyone staying home, many people saw a major decline in their average monthly expenses.
Take time to look back at your monthly expenses before the pandemic, compared with your current expenses, to identify where you can potentially maintain lower expenditures and shift more money towards investing for retirement or another long-term savings goal.
If you experienced a job loss or major financial setback related to the pandemic, now is the time to determine where you can start saving again, or start paying down any debt you may have accrued over the past year. Either way, COVID-19 has been a harsh reminder of the type of worst-case scenario people should be prepared for financially, and to factor into long-term savings plans.
Beyond just setting up a budget, wealth management necessitates looking at every aspect of your financial situation. That includes the type of insurance you have now and what you may need in the future, like a long-term care policy. It considers taxes and legal documents including wills, trusts and power of attorney. Depending on the complexity of your individual situation, it may be a good idea to consult a financial advisor.
If your holdings involve business ownership, you may also want to consider succession planning, and perhaps the help of additional specialists: an estate attorney, tax attorney or certified public accountant.