The past two years have been challenging, to say the least. With all that has happened, our natural reaction as we emerge on the other (or another) side of the pandemic could be to put our heads down and charge ahead to the high ground of better times. But as tempting as that may be, I'd suggest a more measured approach, inspired by my experiences living in a house with three family members on the health-care front lines.
To stay healthy, we all could use a head-to-toe financial assessment. Here are a few questions you can ask as part of your assessment -- and some moves to consider as you move forward:
How Fragile Are Your Finances?
In 2019, the government shutdown reminded us that even those with seemingly reliable income streams are not immune to income disruptions. However, that only foreshadowed the job-market troubles of 2020. Overall, military families, with the financial foundation provided by one safe income stream, fared relatively well, but there was still significant pain. The utility and importance of an emergency fund was once again validated.
What's the cure? If you have an emergency fund and were forced to deplete it, now's the time to reconstitute your go-to cash. If you're a dual-income family and were forced to modify your spending to navigate the pandemic, don't just return to business as usual. Craft a spending plan that allows you to shift into "military-paycheck-only" mode. Right now, that approach could free up funds to pay down debt, save, invest and, yes, have fun without leaving you extended if circumstances again leave you with one paycheck.
Are You Surrounded by the Right Team?
A spirit of independence and self-reliance is a hallmark of service members and their families. However, those admirable traits shouldn't keep you from connecting with folks who can help you in uncharted waters. For example, my oldest daughter (not in a medical field) and her husband are a couple of years into their new real-estate business. While I've always done their taxes, I encouraged them this year to get an accountant who specialized in working with real-estate professionals.
Maybe you need a lawyer to help with your estate planning or could use a financial planner to pull together all the pieces of your plan. Here's the reality: Taxes, insurance, estate planning and investing are interrelated, and a financial planner might be able to help.
What's the cure? Take a look at your finances and figure out whether now is the time to expand your "advice circle."
How's Your Debt Load?
I've often said that just because someone will lend you money doesn't mean you should borrow it. The pandemic has driven home the point that the less debt you owe, the more flexibility and options you have. As we turn the corner on this virus, let's not forget that lesson. Don't let the relief -- yes, I feel it -- of getting to the other side translate into financial decisions you could regret later.
What's the cure? Examine your personal balance sheet. Now is a great time to map out your plan to pay down that debt.
Did the Headlines Shape Your Decision-Making?
I've watched more news over the last year than I have over the last decade. You probably have, too. Honestly, staying informed is good, but it may not help you make good decisions. Did you find your mood ebbing and flowing with the last headline you read, saw or heard? Did your well-thought-out plans survive the onslaught of emotions or wilt at first contact? While it's important to stay informed, you don't want the topsy-turvy news of the day to shape your purchasing, investing or spending decisions.
What's the cure? I've long been a proponent of a "cooling-off" period before major decisions. This approach might be something you can adopt before the next barrage. If there's anything I've learned over the last 25 years, there will be another situation that threatens your personal financial plans.
Has the Pandemic Impacted Your Short-, Medium- and Long-Term Plans?
As we transition to better times, it's easy to see how priorities may have changed. It's highly likely that your cash flow and spending plan have been impacted -- probably in both good ways and bad. Good? I'm thinking there may be spending and savings habits you might want to take forward from the pandemic.
What's the cure? Set aside time for a family planning session to reassess what you want to accomplish from a financial perspective. Review your goals and next steps designed to get you to the point of "mission accomplished."
There you go, a little "financial checkup." I'm blessed to be surrounded by an amazing family and thankful for all they do for our family and our community.
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