Family Financial Tips During Covid-19

Oct 2, 2020 | Family

Parents are facing immeasurable challenges during Covid-19 as they juggle work, family, school, health and finances. Some families are finding that they’re saving money during Covid-19, but many are watching their expenses increase, or they’re wondering how much they can spend to “survive” the pandemic. Worse, some parents are questioning how they can continue to work. We offer several financial aspects to consider as you navigate this difficult time.

What is the best way to take advantage of unexpected savings during the pandemic?

We’ll start with the easy topic first. If you were behind in saving for college or retirement, this could be an excellent opportunity to catch-up toward your objectives. If you were previously on-track with your savings goals, then perhaps you get a little further ahead. You could also consider helping others during a time of immense need. This is an excellent time to teach your kids about the importance of giving, perhaps using some of your savings to impart lessons about philanthropy.

How much “non-budgeted” money can you spend to support your family during Covid?

The reality is that most parents are facing the difficult question of how much they can afford to spend to best function during the pandemic. The list of potential new expenses is long and may include private school tuition, tutoring, home activities, new or updated technology, home office and school furniture, childcare, large-purchase toys such as an outdoor playset, etc. Every family budget is different, but we offer some tips and parameters for consideration.

  1. Accept that your plans might need to alter.

    It’s important to have financial goals, and it’s great if you’re disciplined in achieving them. For many families, however, Covid is throwing a monkey wrench into life and financial planning. The current global pandemic is creating extenuating circumstances that distinctly require flexibility, including financial flexibility. It can be frustrating to see your plans alter course, but that might be needed to get you and your family through this challenging time.

  2. Evaluate what is temporary versus what might become the norm.

    Consider how you and your kids will react to reducing spending on items once the pandemic is over. Some things might be easy to eliminate, like paying for extra tutoring to supplement online school. However, deciding to switch from private to public school is a much more challenging change to make. Carefully consider what precedents you’re establishing now that might become expected later. You don’t want to set yourself up for perpetually higher spending post-pandemic based upon your current pandemic norms.

  3. Ask yourself how long it will take to resave what you’re spending.

    Try to quantify how much more you’re spending during Covid, and then ask yourself how long it typically takes you to save that amount. Hopefully the timeframe is short, over a few months to a year. If longer, then it might be time to evaluate expenses and trade-offs you’d be willing to make longer-term.

  4. Look at spending priorities, now and long-term.

    If you’re concerned about the long-term impact of higher spending during Covid, it’s time to think about ways to counterbalance your new expenses. Maybe it’s spending less on eating out or cheaper vacations once the pandemic is over. Perhaps it’s buying a less expensive car model than you normally would. Everyone’s answer will be different. The important thing is to begin developing a plan, one that’s realistic, actionable, and one that you will truly follow through on.

  5. Contemplate if you’re willing to alter your long-term goals.

    Another way to frame spending during Covid is to consider if you’re willing to work longer. Maybe spending more on tutoring and educational support is worth working an extra year or two before retirement. Delays beyond a year or two should be carefully evaluated as that’s a significant change. Also, you need to be realistic about how long you can work. Delaying retirement from 60 to 62 is much different than potentially delaying from 70 to 72 as your ability to continue working could be more questionable.

  6. Avoid going into credit card debt.

    Hands down, you should avoid going into credit card debt to support higher spending during Covid. We are in uncertain economic times, and credit card debt could be difficult to overcome.

  7. Explore community resources.

    Always explore free resources available from your community, family and friends. Many communities have expanded programs and resources available during Covid. Social groups and educational pods are forming, allowing families to help one another with the new reality of school. Asking for help during Covid is understandable and appropriate (while observing health considerations).

  8. Recognize that you can’t fully compensate for the effects of Covid.

    Some parents are working hard to compensate for the losses that we’re all facing during Covid, especially the losses that our kids are experiencing. While it’s worthy and important to give your kids hope and enjoyment, you also need to realize and accept that you can’t fill all of the voids that Covid has created.

Employment Changes During Covid

One of the biggest financial decisions that parents are facing is their ability to keep working during Covid. New demands on parents to assist their children with virtual school can be stressful and time-consuming, and adding regular job responsibilities on top can be daunting. How do you decide if you can afford to take a leave of absence from working? Ask yourself these questions:

1. Can you support your family’s basic needs in absence of a paycheck?
2. How quickly do you think you could regain employment?
3. Would an employment gap create challenges for reentering the workforce?
4. Do you think you could re-enter work at the same pay level, or might you need to take a pay cut to return?
5. What would the impact be to your family if you have trouble re-entering the workforce?

All of these considerations and others need to be evaluated relative to the costs of outsourcing the help you need now to get your family through the pandemic. Ironically, even if you have to temporarily allocate the bulk of your earnings to pay for help such as tutoring, childcare, meal and grocery delivery, you could be better off long-term by remaining employed and active in your career.

SageVest Wealth Management works with individuals and families to help formulate financial strategies that make sense today and in the long-term. We understand that your finances require real-life planning. Please contact us for more information.

Prepared by SageVest Wealth Management. Copyright .
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