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Jason Gabbard
Founder of justLaw
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5 Personal Finance Lessons Gained from the Pandemic

The COVID-19 pandemic was, or should I say is, one of the most devastating tragedies to strike the world. Fortunately, the world is starting to enter a new realm of “normalcy” that Americans have not quite experienced since 2019. Perhaps, you are starting to feel comfortable not wearing a mask in public or maybe you’re finally going back in the office to work alongside your favorite co-workers. Whatever that “normalcy” for you might be, you should take a second to look back on the pandemic. Remember the loved ones we lost and the loved ones we luckily still have with us. But also reflect on the effects of the pandemic. Did you struggle financially? Did you lose your job? Did you feel prepared for the pandemic? You are not alone. Regardless of your answers to the aforementioned questions, take a second to view what JUSTLAW attorneys have to say are the five biggest lessons they have gathered for themselves as a result of the pandemic.

  1. Set a budget for yourself and your family.

Sit down with your spouse and your family and prepare a weekly budget for everyone to follow. Doing so will help you ensure that any unexpected job loss, stock market decline, or loss of income will not negatively affect your finances. Plus teaching your children some valuable lessons on finances is never a bad thing!

  1. Appropriately manage your investments.

Diversify, diversify, diversify! Invest safely. Do not put all your money in risky investments. Place a significant pool of your money in safe investments and diversify those investments across a wide array of areas such as energy, tech, or any other area you have confidence in moving forward.

One lesson COVID-19 specifically taught us is that bonds are extremely safe and can even survive the worst earthly disasters such as the COVID-19 pandemic.

When the pandemic first started to affect Americans, the S&P 500 sunk by 34%. Despite that, a portfolio that was comprised of bonds aided numerous investors in staying financially sound. Moreover, many bond investors did not feel compelled to sell off their investments based off emotion, nerves, or worries over their new pandemic reality. Such a calmness and confidence provided these particular investors with bonds that outperformed the market during its worst results in years. Therefore, bond investors were able to pull the profits out of their appreciated bonds and invest them in widely undervalued stocks that had largely dipped due to the pandemic. This is a small example of how we can grasp lessons from the pandemic and apply them to our own lives for financial freedom.

However, keep in mind that bonds are meant to keep you safe and rarely should be utilized as a source of quick profits. Bonds should primarily be used to keep your money safe. Thus, if you are looking to build your money, enter the stock market. But remember, to always diversify!

  1. Set aside money for emergency use only.

This is such an important lesson to take away from the pandemic. An emergency fund does not have to be large and can simply be stored in a checking or savings account. The fund should only be used for situations where large cuts to your income would significantly lessen your spending. When emergency strikes, you will not have to worry about a lack of groceries, clothes, or essentials that every human needs for day to day life.

During the pandemic, many of those who lost their jobs had to wait weeks and, in some instances, months, for their unemployment benefits to kick in. Thus, while an emergency fund does not have to last you an entire pandemic, it can most certainly last you enough time to outlast a wait period in between a lost job and unemployment benefits.

  1. Monitor your credit score.

It is equally as important to always monitor your credit score and ensure it accurately reflects your finances. You never want to have a bad credit score. And if you do, it is time to start bulking it up. Credit scores represent your ability to pay and after the COVID-19 pandemic, ability to pay has never been so important.

  1. Create an Estate Plan.

What are you waiting for? Create a will! If you haven’t done so already, then perhaps the pandemic did not scare you enough. Every American, regardless of their age, needs a will. Life strikes fast, and unforeseen global pandemics spark when they are least expected. A lack of a will forces your estate into intestacy. Jump over here for a fantastic dive into intestacy and learn the very many reasons why you never want to hear your name and intestacy mentioned in the same sentence.

Bottom line is every American needs a will and among other documents, including a trust, living will, and a durable power of attorney.

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Do you have any other lessons you would like to share? Call or email us and tell us your story. We want to hear not just from our clients, but any and everyone. After all we are a public benefit corporation and so we want to ensure every American is protected and their personal finances are in order.

 

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