In Tri Delta’s new series, “3 For You,” we’re covering the best tips from experts as we navigate our new circumstances during COVID-19. Tri Delta alumna and Foundation Trustee Janet Timmerman Miller, Toledo, shares her three tips for managing your finances through the crisis. Read her three tips below and listen to the podcast.
One thing on everyone’s minds right now is planning financially during an uncertain economic time. People of all ages are having to determine how to approach their finances and what works best for their situations and their families.
Janet Timmerman Miller is a Chartered Financial Analyst and the senior partner in Rowland & Company, a registered investment advisory firm located in Atlanta. Here, she shares her three best tips concerning personal finance:
Tip #1 Tackle Financial Emotions
Even in “normal,” good times, finance is often an emotional subject and experience. When we’re in times like we are now, those emotions increase. Emotions are an important part of our lives—we wouldn’t be human if we didn’t experience feelings. What many people are feeling currently is the discomfort that arises over grief—we are grieving the loss of control, loss of experiences and how our life is different now.
That’s natural, and it’s ok to feel scared or nervous. Acknowledge your emotions: write them down or talk them out with somebody. But understand that just because you have these emotions, you don’t have to act on them—you don’t have to do anything with your emotions other than feel them. That’s important to remember when applied to finance.
Tip # 2 Focus on Current Situations
Determine what your financial needs are right now. What is your rent or mortgage? What are the obligations or contractual payments you’ve promised to pay? Sit down and focus on your monetary expenditures. These could include your mortgage, car payment, student loans, utilities or credit card payments. At the same time, you’ll want to manage your discretionary spending—that’s easy to do right now, since we can’t go anywhere!
Remember that there is aid available. Most mortgage companies will let you defer your payment, and some landlords may defer your rent or work with you to set up a payment plan. It also never hurts to call your credit card company and ask them to reduce your interest rate. The important thing to remember is you can’t live in a vacuum and ignore your bills. If you think you can’t make a payment, call and explain your situation, and make arrangements so your obligations will be taken care of. There’s aid out there, but you have to take the initiative to go find it. Communication is key, and there’s nothing wrong with asking for help… Always ask!
If you own a small business, find out about new loans through the U.S. Small Business Administration to cover payroll, rent and utilities for your business. If you qualify for these loans, and you meet the criteria for your business going forward, the loan will be forgiven. If you’re a small business owner, be sure to explore this as a possibility.
And remember, the IRS has extended the deadline for filing your taxes and making payments. You have more time to do it, but don’t forget to file. If you owe money, be sure to pay. If you can’t pay the amount you owe, you’ll need to reach out to the IRS and arrange a payment schedule.
Tip #3 Focus on your Long-Term Goals
While investment portfolios may have declined significantly over the past several months, think back to 2019. If you have mutual funds invested in an S&P or Dow Jones index, for example, last year you likely made somewhere around a 30% return. You’re still ahead of the game, based on last year’s returns. Look at what happened last year, where we are now and how those two things relate to each other.
If you have an emergency fund that you contribute to, don’t stop saving. You can contribute a smaller amount if you need to, but keep building that emergency fund. If you have a 401(k), it’s important to be in touch with your HR department to find out what their plans are in regards to their matching contributions—some larger companies may be postponing their matching contributions. For your own 401(k) contributions, keep contributing even if you need to cut your contribution in half to free up cash flow for your personal expenses right now.
For those with IRAs who are taking the required minimum distribution, something else to know is that Congress has suspended any need to take a required minimum distribution in 2020. IRA distributions are earned income—if you don’t need to take that income, you could essentially be lowering your taxes by not taking it. If you have a financial advisor, it’s important to be in touch with them and to let them know your current situation.