5 ways to use your money to build wealth and help others while the coronavirus disrupts normal life
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- Many experts have advised that leaving your investments alone and holding onto cash is the best course of action while the coronavirus continues to spread.
- That's good advice, but there are a few ways you can be using your money actively to build wealth and support your family during these uncertain times.
- Maxing out your retirement savings, rebalancing your budget, considering a home equity line of credit (if you need extra cash), and helping others are great places to start.
- SmartAsset's free tool can find a financial planner to help you take control of your money »
You'll likely read a lot of pieces in the near future about the things you shouldn't be doing with your money while the stock market is up and down (such as pulling it out of the market, breaking your budget to buy toilet paper, etc.).While those are important tips to keep in mind during a chaotic economic time, there actually are some other things that experts wish you would do with your money right now. Advertisement
Here are a few of them.
Stay the course
You've probably read that now isn't the time to pull all of your money out of the market, so the opposite of that would be to keep investing."Investors should continue to fund their IRAs and 401(k) plans," said Don Grant, Certified Financial Planner and investment adviser with Carey, Thomas, Hoover and Breault. "In fact, if they can up their contributions by 5%, it will pay off in the future."
Rebalance your budget
Whether you're invested in the stock market or not, are continuing to get a paycheck throughout all of this or not, it's likely everyone will be impacted - at least in some small way - by what's happening right now.As such, Lynn Ballou, Certified Financial Planner at EP Wealth Advisors, recommends working on your budget and slashing spending wherever you can. "When the markets recover - and they will, despite the fact that we don't know when - we want our families to be solvent and capable of dusting ourselves off and moving forward without being burdened by unwelcome debt," she said.
Part of rebalancing your budget should also include revisiting your emergency savings fund to ensure you have enough liquid cash. Advertisement
"The typical recommendation is to have enough cash on hand to cover three to six months of your necessary expenses," said Andy Panko, Certified Financial Planner and owner of Tenon Financial. "Now is a good time to update your analysis and assumptions as to whether three to six months is enough."
For example, if your job is the sole source of income in your house, and you work in an industry - like retail or travel - that has a heightened risk of layoffs, it may take you longer than three to six months to find a new job if you were to get laid off."With that in mind, do what you can now to cut expenses and save as much as you can in preparation," Panko said.Advertisement
Max out your 401(k)
Since prices are down, putting more money to work in your 401(k) now makes sense, said Spencer Betts, Certified Financial Planner and financial consultant with Bickling Financial Services. "Prices certainly can decrease further, but patient, long-term investors are likely to be rewarded by buying when prices are down," he added.
Reconsider that home equity line of credit
Although the renovations that you were going to use the HELOC money for aren't likely to happen in the very near future, if you were considering a HELOC or taking out a second mortgage, now might be the time to investigate your options."The cost for borrowing money in a home equity line has decreased with the drop in interest rates," said Betts.Advertisement
Help out where you canIf you're in a position to be less worried about your finances than others, now is the perfect time to figure out where you can pitch in.
"For those of us who can cut our budgets and spending and realize we have money to offer, we should figure out in our own communities how to offer support to those in need," said Ballou. "Free food and delivery, cash to pay bills, assistance with learning technology to be able to homeschool our children - be practical and be helpful locally and that's how we'll all get through this."
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