COVID State of Mind

Earlier this year, a Capital One study reported that 77% of Americans felt anxious about their personal financial situation. While we can only guess what the percentage is today, we can predict it’s higher. Today’s levels of uncertainty are impacting everyone regardless of where your mental health stood pre COVID.  Anxiety is a result of stress, and stress shifts our brain into survival mode where decisions are made decisively but not always accurately. Before making changes to your finances during this time ask yourself three important questions. 

What’s my why?

Why are you making this decision now? Are you acting out of fear or necessity?  Avoid making decisions immediately after listening or reading financial news.  While the state of the economy is important, it may have little bearing on your current financial situation.  Take a moment to digest information you hear and consider how it applies to you before acting upon it.  

 

What are the consequences?

Are there positive or negative consequences to the decision you are making? Many companies are offering flexible payment terms, and the passage of the CARES act relaxes access to tax advantage retirement funds. Before taking advantage of any concessions you need to ensure it won’t unexpectedly worsen your situation. If you delay payment, or take a loan how much will it cost you in interest or time? What are the terms? Sometimes slight relief now means more grief later. Be sure you take the time to perform a full analysis of all the consequences.  

 

Am I making a change to my financial goals?

Every decision you make brings you closer or takes you further from your financial goals. Nobody wants to sign up for the latter, but in times like these your circumstances may call for it.  If you need to borrow money, miss a payment or shift things around to make ends meet, that’s okay. What’s not okay, is failing to establish a plan to get back on track as soon as possible. The power is in the plan. 

 

Not many personal finance decisions require a knee jerk reaction. Investing the time to ask yourself these questions will decrease the chances of you making a financial move you’ll later regret.