During times of crisis, it’s normal to feel uneasy about your personal finances. The COVID-19 pandemic sent the U.S. economy into shock, changing the way that people manage their money. Developing your own plan is key to maintaining your financial health and feeling like you are in control.
During this webinar, Ann Martel (BBA ‘81) breaks down the four legs of personal finance.
If your industry hasn’t been affected by the pandemic as much as others, think about whether it’s time to ask for a raise. Do your homework on sites like Glassdoor to know what you’re worth and market yourself based on what you’ve contributed to your current company. On the other hand, those working in struggling industries may not be positioned to ask for a raise and it might be time to consider an additional source of income. Using evenings or weekends to work a part-time job is a great way to build additional savings that can help you in the long run.
Managing expenses can be tough for a lot of people who like to live in the moment, but that can hurt you from a financial perspective. Think about the smaller, more irregular purchases you make each month, and reduce that spending. Spend less on things you can live without, like entertainment, take out, and subscriptions. If you’re not seeing drastic improvements to your monthly spending, consider refinancing your home while interest rates are still very low.
It is possible to start reducing debt once you have some additional cash flow. If you received a stimulus check and are in the position to put that towards outstanding debt, do so. Although student loans have been deferred since the beginning of the pandemic, you should continue making those payments if you’re able. With interest being deferred, all of those payments will go towards reducing the principle of your student loan debt. Focus on reducing your debt every month and you will start to see improvement.
Experts have said that a three-month emergency fund is recommended, but after seeing how the last year has affected people, six months’ worth is a safer option. Make sure this money is stored in an account that you can access at any time. Then start thinking about the big ticket items you know you need to save for, like a house or education for your children. If you feel uncomfortable managing your portfolio alone, find a financial advisor who understands your goals and can tailor a plan based on your situation.
Ann Martel (BBA ‘81) is the instructor of Finance and Accounting for Non-Financial Professionals at the Wisconsin School of Business Center for Professional and Executive Development. Martel draws on her background as a certified public accountant and her 20-plus years of Fortune 500 and government contracting experience as she works to develop financial literacy at all levels of an organization. Martel has held controller, director of accounting, and CFO roles at many organizations, including American Family Insurance, WellPoint Inc., and Attic Angel Community. She holds a BBA in accounting from the University of Wisconsin-Madison and has completed the coursework for her MBA from Cardinal Stritch University.