It might be hard to believe, but summer is just days away — which also means we’re months into the crisis caused by the global COVID-19 pandemic.
This has impacted all of us in some way. Perhaps you’ve felt it directly through a layoff or a loss of income. Maybe it’s made a more indirect but still difficult impact on your life, through the disruption of your normal day-to-day, the forced switch to remote work (and schooling, for parents and students), the lack of access to the places we love going and the people we most want to see.
There’s no denying that we’ve all experienced anxiety, stress and upheaval — and we don’t know when (or if) things can revert back to how they were before this winter. What we can do, however, is learn from this experience.
What Times of Crisis Can Teach Us
Although no one wishes for an event like this to happen, the fact is they can and they absolutely do. That might be the most important thing anyone can learn from the experience of the pandemic: Crises are inevitable. Life will throw us curveballs. We can expect the unexpected.
We can’t predict what the next crisis event will look like. But we can prepare for it. That’s true even if we don’t know when it will happen, either.
There are a few fundamental, preventive measures we can take — all guided by the lessons we can learn from this time around.
Take the Opportunity to Get to Know Yourself
There’s nothing like experiencing a tough, trying or anxious time to understand how you truly respond to uncertainty, stress and risk. A good question to ask yourself right now is, how did you react to current events over the last few months?
Specifically, you may want to consider if you like risk as much as you said you did in the past when it comes to your investments. Did realizing some of the risk of investing and seeing unrealized losses in your portfolio spook you more than you thought it would?
If you felt tempted to get out of the market back in March 2020 — or if you actually acted on those emotions and sold or moved to cash — what can hindsight tell you now? The answer is, if you see where the market is today in early June, you may have overreacted.
And if you did react emotionally or in a way that feels irrational when you look back from the vantage point of a market that smoothed out some of its volatility, don’t beat yourself up for it. It’s understandable.
But take this as a lesson learned. If you realized you didn’t stick to your investment plan this time around, what will you do differently the next time a crisis (or second wave of this pandemic) comes along?
Commit to your action steps in writing. Then, when you feel tempted to respond emotionally again in the future … refer to your commitment, and stay the course.
Are You Truly Prepared for an Emergency?
Another aspect of your financial life to take a look at is your emergency reserve fund. Financial experts always preach not touching cash savings that you set aside for the unexpected unless it’s a true emergency — and many people found themselves in just that situation when their job evaporated or they took a massive pay cut.
Now is a good time to take stock of what happened in your life. Did your emergency fund hold up to support you when you needed it to do its job? Did you have enough in cash? Or did you even have too much in cash?
If you found that you depleted your savings, building that back up – to a level above its previous mark — may need to be a priority on the other side of this crisis. And if you realized you’re sitting on far too much cash, your action may be to deploy some of that excess into the market so it can get to work for you.
On a similar note, it might be a good time to evaluate your career. Is your job as secure as you thought? Has your field changed the way it does business? Does this put you in a stronger position, or give you the perspective you need to seek new opportunities?
For example, as an advisory business that works with over half of its clients virtually, our firm was well-positioned to handle the crisis from a technological standpoint. We are also well-positioned for the future as we believe more and more our clients will realize they may prefer a Zoom call.
While you might not need to make a major career shift, a time of crisis is a good reminder to, once we’ve regained our footing, consider how we can be more adaptable with our work and our ability to earn an income.
What Could You Do Differently?
As you have navigated the past few months, did you feel like you had everything under control — or did this highlight how many items on your financial to-do list are outstanding and in need of attention?
Now is a good time to take stock of what just happened… and what you wish you had done leading up to or during the most stressful periods of the recent past. That might look like getting organized, taking care of items you’ve been putting off, or even reaching out to get help with proper management of your financial life.
If this event made you realize you could use a little more support and guidance to ensure you stay on the right track with your finances, let us know. Our purpose is to help you navigate through uncertain times and challenges, so that you can get to the other side with your financial plan in tact and remain on track toward your biggest financial goals.
(Article written by Paul V. Sydlansky)