In these challenging times, it's only natural to feel unsettled about our careers and finances.
My approach is to keep it steady: Make a smart plan and do your best to stay confident and focused on the long term. Here are seven strategies that I share with my clients to help them improve cash flow, reduce expenses and relieve anxiety.
- Do the math.
Understanding where you are is the first step in gaining confidence. First, add up your income and cash reserves. Depending on your situation, this may include salary, unemployment benefits, a severance package, an emergency fund and other savings tools. Next, look at your expenses, debt and other obligations to determine how long your current financial resources could last. You may be better off than you think.
- Trade a budget for a cash-flow plan.
I've never liked the word "budget." It sounds like I'm being deprived. Even in uncertain times, you're still in control of how you spend your money, so I prefer the term "cash-flow plan," which prioritizes those choices. As you create your plan, allocate amounts for your mortgage, rent, food, retirement savings and other necessities. Then, plan to treat yourself. It might not be possible to plan that trip to Mexico right now, but you can create a Mexican-themed staycation. Play vacation music, get some excellent Mexican food, and sip your favorite beverage while dipping your toes in a kiddie pool in your backyard. I like to get my nails done. Other people like to surprise friends with gifts. You can spend on anything without guilt as long as it’s in your plan. And incorporating those splurges helps you feel a sense of normalcy.
- Cut expenses without a care.
You may be spending money that you don't even realize—and can cut back without feeling the difference. Think about your expenses. Not driving as much? You may not be using that audiobook or satellite-radio subscription. That free trial you forgot to cancel may have turned into an unwanted monthly charge. Expensive meal kits, subscription boxes and that weekend-morning online shopping habit can all be cut. Grocery shopping and cooking meals at home add even more savings. Eventually, finding cuts can feel like a game.
There is one exception: Leave your retirement plan contributions the same, especially if your employer offers a matching contribution. Otherwise, you're missing out on additional compensation. Plus, you might not miss those pre-tax dollars as much as you think.
- Negotiate like a boss.
I learned an important lesson about checking my bills regularly recently. When I looked into how I could save on my homeowner's insurance policy, I found they had the wrong square footage. That was a $500 annual savings! Many auto insurers are offering discounts because people aren't driving as much. And be sure to check monthly bills like your cable and mobile phone. Many providers are offering discounts during the pandemic if you simply ask.
- Work with your lenders.
Sometimes, I find that people are afraid to reach out to lenders if they're having trouble. But if you're struggling to make credit card, mortgage or other loan payments, that's one of the first things you should do. Banks may work with you during the pandemic to pause payments or restructure what you owe to help you catch up. Government stimulus packages may also give you deferment or other options you didn’t know you had.
- Start a side hustle.
There are always ways to make a little more money. If you've cut expenses and still need to make ends meet, consider starting a part-time job or even a small business. Freelancing, consulting, selling items online—each can bring in some extra cash. A friend of mine who was out of work started doing odd jobs. Soon, he had replaced his income and become his own boss, too. If you're collecting unemployment benefits, just be sure to read up on how additional income may affect your benefits.
- Get professional advice.
When I meet with a client to create a financial plan, we spend time considering very personal matters like their risk tolerance, income, and goals. Plans also factor in some amount of risk. And while no one predicted the situation we're in today, your financial advisor can help you understand the benefits of investing for the long term, no matter what the climate. So, reach out and ask questions. It may be time to reallocate your investments to hedge against risk. If you're concerned about income in retirement, they may recommend investing in a vehicle that provides guaranteed income, such as an annuity.
During times of career uncertainty and change, it can feel harder to stay the course financially. But tough times pass. Following your plan is like having a road map to see them through. And knowing the smart moves to make now will help you feel in control.