During Periods of Market Stress, Planning is More Important than Ever


Vanessa Mavec King, CFP®, Director, Financial Planning

Over the past few months, COVID-19 has completely disrupted life as we knew it. The pandemic has brought an enormous amount of uncertainty, stress and fear with it. In times of crisis, it is important to stay focused and take action on what we can control.

A proactive and comprehensive financial plan sets the groundwork to be prepared for meeting challenges like COVID-19 without having to lose sight of your most important financial goals and values. Now is the perfect time to create or revisit your plan with a fresh set of eyes.

Here are some simple financial planning steps that can help provide peace of mind by evaluating where your finances stand today.

Re-Evaluate Cash Flows – Income, Saving, Spending

COVID-19 has caused the greatest unemployment rate since the Depression era. There have been unprecedented layoffs, furloughs and salary cuts. As companies continue to tighten budgets and decrease revenue projections, it’s a good time to consider if any short or long-term income projections for your family have changed.

With the disruption to daily life, our spending habits have also seen major changes. Taking time to introspectively put together a budget that accounts for your ‘new normal’ will help set expectations for spending.

Even if budgets have gotten tighter, one of the strongest weapons for uncertainty is savings. Funding and maintaining your emergency fund (cash reserves) and continuing to contribute to your retirement accounts remain incredibly important actions.

Reset your Balance Sheet

What assets do you own and what debt do you still carry? With recent market volatility, it is likely asset values have changed. Do those changes affect your ability to fund your financial goals? Additionally, with historically low interest rates in play, there may be strategies to refinance and reset your debt planning.

Revisit Risk Tolerance

The market has experienced its first bear market in more than a decade. There is no way to tell how long this will last. Is it time to have another discussion on how much risk you are willing, able or need to take in your investment portfolios? What asset allocation has the highest chance of success in funding your financial goals?

Update Scenarios

Given all the change occurring, there are likely new stress-tests or scenarios for which you would like to see projections. How do all of these recent changes affect your overall picture? Do any financial goals need to be reconsidered?

Right now, there are endless unknowns, but one thing is certain, there will always be change- priorities change, markets fluctuate, emergencies happen. Proper financial planning is critical to keeping you on track to achieving your financial goals and limiting stress, especially during unique and difficult times like these.

Ancora’s planning team is here to help, please reach out to your Ancora representative to discuss creating or adjusting your financial plan at any time.

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