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The coronavirus pandemic has changed our lives in many ways, and whether you’re thinking about the physical and social aspects or the financial aspects, there is no clear end in sight. The American economy has fallen to a dramatic degree, and an astounding number of people have lost their jobs or been furloughed for an indefinite period of time.
If you and your partner are among the millions whose finances have been impacted by current events, now is the time to make sure you have a plan in place to allow you to work together through the crisis. There are many positive, constructive steps you can take that will make sure you’re both on the same page and understand your priorities and needs. We suggest starting with the following five steps.
1. Make a date to discuss your finances.
It’s a mistake for either of you to assume that you have a full picture of what your economic situation is without first sitting down and having an open and honest discussion. Whether you include your financial advisor or not, set aside a specific time when you can sit quietly and without interruption and go over all of your appropriate documents and records. Though there’s a lot to talk about and conversations about money can get tense under the best of circumstances, try to prioritize these three areas at a minimum:
3. Review and revise your expenses
Budgeting is hard, but when you’re in the midst of a crisis it is a good idea to eliminate extras so that you can save more. If you’re in a situation where you may be forced to take a pay cut or lose your job entirely, you’ll be glad to have lower bills. You also won’t be alone – a recent Bankrate survey showed that more than half of American adults have cut their expenses in direct response to the pandemic.
Not sure where to start? Go back to those monthly expenses that you reviewed in step 1 and determine what is necessary and what isn’t. Ask yourself whether you “need it” or “want it” and eliminate as many of the wants as possible. If you cut down by eliminating cable channels that you rarely watch or start cooking more meals at home, it will help a lot. Likewise, try to become a smarter shopper when you’re at the market, looking for sales, clipping coupons, and purchasing less expensive brands. Finally, now is not the time to indulge in the luxury expense you’ve been saving for. There’s a good chance that you’ll be much happier having that money sitting in your bank account in case you end up needing it for rent or food.
4. Understand what your health and life insurance policies provide
It may feel pessimistic, but the reality is that a significant percentage of the population is vulnerable to the coronavirus, and it’s a good idea to know exactly what your health insurance policy covers and what it doesn’t. You don’t want to find yourself facing unnecessarily high bills because you didn’t understand what kind of coverage was offered, and if you have time to expand your policy to provide for your needs, now is the time to do so.
It’s also a good idea to make sure that you have all of the pertinent insurance information available in case of an emergency. If you don’t have an insurance card, find your carrier’s name and your policy number and write it down someplace where it is easily accessible. Make sure that you both know whose name the policy is under and that you’re sure both of you are covered, and familiarize yourself with your plan’s co-pays, deductibles, and maximum out-of-pocket costs. If you understand how much you are likely to have to pay out of pocket, then you’ll have a clearer idea of how much money you need in the back in case one of you ends up requiring medical care.
While you’re doing that research, it’s also a good idea to look up your life insurance policy and make sure that your beneficiary information is correct. This is particularly important for those who are divorced and may never have updated their records to take an ex-spouse off their policy.
5. Have a serious conversation with your financial planner
If there was ever a time for you to seek sound advice from your financial planner, it's now. The conversation that you and your partner have should raise questions about how best to move forward and we can help you through that process.
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