Covid 19 Financial health checkup

Covid-19 pandemic made us look at ourselves differently. With all the restrictions around the first and foremost thing to ensure is our own and family’s health. But at the same time, it’s also important to sit back and do a financial health check-up during this global pandemic. 

Here is my Financial Health checklist built for MMC readers during this season.

  1. We experienced extreme volatility in stock and bond markets this March. This sometimes causes panic among long-term or buy-and-hold investors causing them to jump off the ship at the wrong time. This would be a good time to revisit asset allocation across all tax-deferred and tax-advantaged retirement accounts, and any taxable accounts to ensure we don’t take any irrational decisions during difficult times. Maybe, consolidate multiple retirement and taxable accounts to simplify the financial management.
  2. The Mortgage rates have been going south this year and if one has a real-estate mortgage (primary or rental) is an excellent time to shop for better rates to refinance the current mortgage. The refinance will help to reduce the length of the mortgage or increase the cash flow. An important tip here is to look for no-closing costs mortgages so that you incur no costs at all allowing you to refinance again in future if rates go down further.
  3. In addition to home, auto and life insurance, one important aspect often overlooked is Umbrella policy for liability insurance. Umbrella insurance gives you additional liability protection above and beyond your existing liability limits in reference to car,boat,etc and real-estate accidents. This doesn’t guarantee that all your assets and present/future earnings will be protected but places you in a good position if some unfortunate event were to happen.
  4. We can also think about contributing (if not already doing so) to Health Savings Account(HSA), College Savings Plan(529) accounts and investing in those accounts based on one’s needs and suitability. We can also consolidate multiple HSA accounts with any previous and current employers to simplify the financial management. 
  5. Another thing to consider is Estate planning that involves setting up wills and trusts. 

Thinking about the above-mentioned financial aspects would be a first step in the right direction and then we can act on those at our convenience.

We can’t control Covid-19 situation, but ensuring financial health is certainly in our hands.

केतन पारेख
Aurora, IL