The COVID-19 pandemic has affected many aspects of everyday life for Americans, including how we look at our finances.
Dr. Richard Stebbins, assistant professor in the department of consumer sciences, teaches financial planning and has addressed several current issues and provided tips for the future.
How have Americans adjusted their financial plans in light of the COVID-19 pandemic?
Many have seen their personal businesses decline or have been furloughed or laid off by their employers, and it’s difficult to know when there will be a return to normalcy. Financial planning adjustments for many should be making a new spending plan to make dollars last through this unknown.
This can be an overwhelming process. Luckily, there are financial counselors providing free advice through various outlets.
Should people look at adjusting their retirement plan or try to ride out the storm?
It depends on your timeline. Those with a longer time horizon should try to stick to the current retirement plan or create a retirement plan.
Those planning to retire in the next five years will most likely need to make some adjustments. Reallocating investments and considering delaying retirement are potential solutions.
With certain stocks being low due to the market, is this a good time for first-time investors to buy stocks?
Down markets are a great time to buy. However, I recommend first-time buyers look at exchange-traded funds rather than individual stocks. These mutual funds offer an element of diversification along with professional management.
Should people feel guilty if they have to dip into their savings or rely on credit cards to support themselves during this time?
Not at all. The first consideration should be keeping a roof over your head and food on your plate.
Those relying on credit cards are not alone. In 2017, the Federal Reserve reported that 40% of households wouldn’t be able to handle an unexpected expense of $400.
What are some ways people rebound to reach their financial planning goals once everything gets back to normal?
Living through a pandemic that caused massive job losses means that many people have dipped into emergency funds, retirement plans and possibly even taken on debt. Creating a budget will be the first step to making a plan to rebuild. But keep in mind that rebuilding will take discipline and time.