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5 Ways to Boost Your Financial Health Amidst COVID-19

Posted: April 13, 2020 in Achieving Financial Goals

Financial decisions can feel complex and difficult even under normal circumstances. If the current market volatility has you questioning what are the “right” actions you should take now, you are not alone. Here are five substantial ways you can jumpstart your financial wellness in the wake of the novel coronavirus.

Don’t touch your face or your 401k

Time for some facts. Markets fluctuate over time, and returns often come with risks. While COVID-19 is certainly adding unprecedented volatility to the stock market, it is critical to take a long-term view when it comes to investing.

Chances are that when you set up your 401k or IRA, you picked a diverse asset portfolio, and selected a monthly contribution that you were comfortable with. Trust that you picked the right option, and stay the course. When considering your retirement, the strategy you had in place in February should be your continued strategy for the months ahead. Take a deep breath and trust that the market will bounce back.

When it comes to investing in your retirement, the best thing to do is invest regularly and aim to have a monthly contribution of 10-15% of your total income. If you have more questions about saving for retirement, and finding a plan that’s right for you, contact ProFed Financial Advisors.

Build Emergency Savings

Unexpected moments like these are precisely why an emergency fund is so critical. An emergency fund should consist of around 3-6 months of take-home pay. If you have that saved up to tap into, great job! If you are among the 40% of Americans who would find an unexpected $400 expense challenging to pay, know that you are not alone, and there is always time to build your savings.

To start, dive into your finances from the previous month. Take a hard look at non-essential spending. Eliminating even small expenses, especially monthly membership fees, can quickly add up over time. After you have canceled or paused any non-essential recurring payments, create a budget tracker to identify where and how you spend your money. How much were you spending on dining out? Entertainment? Online shopping? You can easily track your spending with our free money management tool in online banking under the additional services tab. Once you have that breakdown, you can more accurately set goals around what you need to start, stop, and continue doing in order to build your emergency savings.

If you’re new to the world of budgeting, the 50/30/20 rule is a great place to start. Spend 50% of your pay on needs, 30% on wants, and 20% on savings or paying off debt. Be sure to set a goal of how much money you want to contribute to your emergency savings each month, and don’t forget to celebrate when you meet (or exceed!) your goal. For additional help with how to approach emergency savings, explore the many ways you can save with ProFed

Refinance a Loan

March 2020 marked a period of extreme market volatility, to say the least. To stabilize and protect the economy, the Federal Reserve slashed interest rates to record lows. These decade-low interest rates could save you money if you choose to refinance your auto loans, mortgage, private student loans, or other debts.

ProFed makes it easy to refinance your auto loan from the comfort of your own couch. Apply online to enjoy a better interest rate that will lower your monthly car payment and reduce your overall loan amount. 

Favorable mortgage rates suggest that it's a good time to refinance your home loan. Traditional advice is to refinance when rates are 1-2% below your current rate. Make sure to keep an eye on your closing costs, so you make a decision that takes all costs into consideration. Calculate your potential savings with our refinance calculator, and also consider other key questions posed by our mortgage team when thinking about refinancing your home loan. 

Keep in mind that federal and private student loans are different, and you could be losing benefits by adjusting your federal loan. If you need further advice on refinancing your loan, contact our lending team for assistance.

Time Your Taxes

For any procrastinators that have put off doing their taxes, good news - U.S. taxpayers have a three-month extension on the deadline to file their federal tax return due to the novel coronavirus pandemic. Tax Day has been pushed from April 15th to July 15th, 2020. Most states have matched the July 15th deadline, including Indiana.

If you are among the many Americans who typically receive a tax refund -- that is, you paid more taxes to your state or federal government (through payroll withholding, for example) than your actual tax liability, the Internal Revenue Service (IRS) is advising that you file your taxes earlier so that you can get your money sooner. As a ProFed member, you can save money when you file with TurboTax.

Make a Plan and Take Control

You can only control what you can control. The good news is that your financial decisions and behaviors are 100% under your control.

Use this time at home to reset any riskier financial behaviors. This is a great time to start building healthy financial habits, while the lure of expensive purchases like events, sporting games, vacations, travel, fancy restaurants, etc. are off the table. Find your money zen - what spending habits make you happy? What do you spend money on that you have no memory of a month later? Which purchases sit on a shelf collecting dust or cluttering space?

Take the time to build a budget and stick to it. Remember, our money management tool in online banking helps you create and track budgets, combine balances from other institutions, and categorize your spending. Next, build your emergency savings fund. Start saving with ProFed because life is full of surprises, some of which can be stressful and costly. Finally, set up regular monthly investments. It's important to invest in your future ahead. Use this time as a bootcamp to become a top-notch steward of your financial present and future. You’ve got this.  

This blog content was created in partnership with EVERFI. ProFed is a member of EVERFI's Financial Capability Network, and we are proud to deliver critical financial education to our communities.

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