Mentoring in place: 4 money tips you need right now

By Melanie C. Simons, CFP™, a Senior Director of Wealth Management who leads a team providing financial planning for TIAA clients 
You’re probably familiar with the concept of having a professional mentor, and may even work with one regularly. But have you considered seeking out a money mentor as well? Regular conversations with someone who successfully navigated previous downturns could provide some welcome help, reassurance and an action plan in these challenging times. If you are lucky enough to have an experienced colleague, close friend or family member with some financial savvy, it could pay to ask them what they learned in past bouts of volatility.
 
Or, if you’ve been through a downturn yourself, as I have, you may have lessons you’d like to share with younger co-workers. I’ve personally survived several periods of economic uncertainty, so as you seek your own money mentor, here are four steps I would suggest that people newer to the workforce consider taking to stay on track financially.
 
  1. Put things in perspective.
    This is a good time to do some history homework, focusing on ways that past economic cycles have recovered over time--and how long economic downturns tend to last. We can look at the financial crisis in 2008 and 2009, for example, as part of a cycle. While the current situation isn’t quite like anything that has happened before, try to remind yourself that every downturn in history has ended with a recovery. A quick look at the past few decades is enough to see that economic bumps in the road are not all that unusual. It’s natural to feel uneasy in the moment, but the U.S. economy has a strong track record: Nearly every American recession in modern history has lasted less than a year. With that context, you may feel less inclined to liquidate your investments or put your savings goals on hold. Instead, try to focus on what can you do differently, or better now, to work toward becoming more financially prepared for the future.
     
  2. Ditch your debt—and build your savings.
    One of the best ways to feel more in control of your cash flow is to avoid accumulating debt—and work to pay down what you already owe. Your first priority should be bills with higher interest rates, often including credit-card balances. And if you had planned to spend on a vacation you have postponed for now, or a monthly gym fee that you canceled, see if you can apply the amount you would have been spending to accelerate your payments on bills like car payments or student loans. Most of us are also saving on lifestyle expenses right now thanks to social distancing and health concerns. If your work situation is stable, challenge yourself to apply what you formerly spent on commuting, dry cleaning and so forth to your savings. You could even set a new goal, such as saving for a child’s college education or your first home. (One exception: If you have been furloughed or lost your job, your priority should be stabilizing your cash flow and making minimum payments for now.)
     
  3. Stay the course.
    When it comes to investing for long-term financial goals—including retirement—there’s no better time to be doing that than now, if you can. Taking advantage of every tax-deferred or tax-free savings account available to you at a time when some investments have fallen in value is a smart way to maximize the potential growth for your long-term plan. So consider adding up every dollar you aren’t spending on parking or going out for lunch and making an additional contribution to tax-deferred investments, such as 401(k), 403(b) or other employer retirement plans. Equally as valuable are contributions to an individual retirement account or 529 college savings account, which have the potential to increase in value with attractive tax benefits for the future.

    Here’s the caveat: We’re talking about investing for long-term goals—so don’t put your life savings or your emergency fund into a volatile market. But if you think you have the fortitude to keep a portion of your savings invested, you can prepare for your future goals and build financial wellness to weather future downturns at the same time. It’s important to not attempt to “time” the financial markets, but if you can invest what you otherwise would have been spending on going to the office, certainly take advantage of that.
     
  4. Increase your impact.
    With so many challenges facing our communities right now, opportunities for giving abound. From pop-up food pantries to all kinds of not-for-profit organizations seeking more support, you may feel a new urgency when it comes to helping the causes you care about. I have taken the funds that I’m saving on work-related and commuting expenses to increase my own donations to the organizations that matter most to me. I’m doing it because I see it as a way to personally invest in my community and my family’s future. If you’re focused on giving now as well, make sure to explore all the ways you can increase your impact. Your employer, for example, may “match” contributions to certain charities. Or you could take advantage of “challenge” grants from foundations or other large donors to increase giving to specific causes.
Staying focused on the long term, especially when the short term feels uncertain, is the biggest lesson I could share as a money mentor. Whether you do it by taking a look back in time, leveraging lower personal expenses to pay down debt, saving for the future, or giving back, you have dozens of opportunities to see beyond the current crisis ̶ and to view this moment, in spite of its challenges, as your opportunity to build a stronger financial future.
This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.
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