With so many Americans feeling uneasy about the economy and their finances right now, we decided to ask some of our financial advisors across the country to share their insights and advice for uncertain times.
Below, Kasey Gartner, an Atlanta-based financial advisor for Northwestern Mutual, shares her advice for people feeling a hit to their paychecks — and the money lessons she thinks kids can learn right now.
There are a lot of Americans feeling a direct impact to their paychecks because of the coronavirus. What’s the immediate advice you’d give them?
For the people who are out of work right now, or who aren’t salaried and seeing their production or hours reduced, I’d recommend a freeze on any nonessential spending until you know when the income is coming back.
This requires a conscious effort not to spend money. With the Internet still working, I know that can be hard. But I always say, you’re busy making money or you’re busy spending money. There are a lot of stores taking advantage of the fact that people are spending their free time shopping online. You might be tempted to buy items to keep your kids occupied at home or because your favorite retailers are suddenly slashing their prices. But none of us knows how long this will last — and the credit card bills will still come. So we need to stay in control of the things we can control right now.
I also always recommend having three to six months of living expenses in a high-interest savings account to act as your emergency fund. If you have an emergency fund, now’s a good time to dip into it if you need to in order to cover essential expenses.
For all the parents spending time at home with their kids, is there an opportunity in all that’s going on to teach children a money lesson?
We all have a lot of time to fill with our kids, so I think it’s a great opportunity to educate kids about money. You could even call a financial advisor and have your kids listen in on the conversation, and ask the advisor to explain things in layman’s terms so that they can understand what’s going on with the market and why we don’t need to be afraid. Advisors are around and happy to help — this is what we do!
Many kids are also watching their parents work from home right now, so there’s another opportunity to help them understand what it is that you do, and why you do it — that is, to make a living. You can help explain how your paycheck helps the family. If you don't do it already, think about giving young kids an allowance for doing chores so they know what it feels like to earn money. These are great ways to help kids understand the value of a dollar.
What are a few key things you really want to drive home to Americans right now about their finances?
For starters, I think it’s important to acknowledge what’s truly important. If I'm going to be mandated to stay home, then I'm thankful I have a roof over my head and running water. Yes, I may feel uncomfortable looking at my retirement plan right now, but I’m not planning to touch that for 20 to 30 years, so it’s the least of my concerns.
But everyone has different goals, so I'd suggest using the time you have now wisely to think about your goals and objectives. If you’re closer to retirement, see where you are and if you need to make any tweaks to get back on track. If you were planning on retiring in 30 years, that could still happen the way you want it to. Or in the short term, if you were looking to put a deposit on a new apartment in the next few months, that might need to change based on your budget. The point is, if you don’t have an advisor, now would be a good time to connect with one to help you navigate through all this noise and make adjustments that make the most sense for you. If you have an advisor already but haven’t met for your annual update, look to connect now.
Another good reason to pick up the phone — you don’t want to make long-term decisions based on short-term information. We’re in a bear market right now, but that is the normal course of the economic cycle. Make sure you don’t make any moves based on emotion instead of your goals; my response would be the same whether we were in a crisis or not. So have those money talks, review budgets and put together a plan with your advisor. This is our job and what we’re here for.