This is part of the Intrepid Eagle Finance Guide to Fall 2020. Click here for more on how to get your family ready.
Prepare Your Finances for Fall 2020
Money takes on many meanings in life with our families. It's what allows food to be on the table. It's what pays for new shoes when a kid's feet get bigger. It's what fixes the roof when there's a leak. Money can also be a source of stress. When coupled with news headlines that are less than positive, that stress can be a real burden as we worry about the financial part of life.
Predicting the future is hard, but if you're worried that something might go sideways there's reasonable things you can do to put your family in a better position. Some of the steps below are beneficial in any season. Are they beneficial right now? Absolute.
Keep reading for how to get for your financial house ready for fall 2020.
"The way I see it, if you want the rainbow, you gotta put up with the rain." Dolly Parton
Why your finances?
Fall, for your finances, might be rocky or it might not. Consider the steps below as ways to better prepare your family and have less money-related stress in your life if the news turns negative.
Prepare Your finances 💵
Ready the reserves ☂️
Examine Spending 🧾
Make A Debt Plan 💳
Stay Safe 🦺
Don't lose focus ➡️
"A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences." Proverbs 27:12 NLT
1. Ready the Reserves
A buffer in your financial life is very important. If you take an umbrella or a poncho on a walk, you won't be upset if the rain doesn't show up. If a downpour does happen, how glad will you be that you prepared your family's financial life?
Start or Add to your Emergency Fund
It doesn't matter if it's called a rainy day fund, emergency fund, or any other name. The purpose is to protect your family. From what? Your car might need unexpected repairs. Your roof might spring a leak. Someone in the family could need a trip to the emergency room. There could be a layoff or something else affecting your family’s income. An emergency fund helps your family weather that storm with less stress and avoid going into debt. Click below for our free checklist on how to calculate how much your family’s emergency fund should be and how to get started.
Add to your Health Savings Account (HSA)
If you family’s medical insurance plan is a High Deductible Health Plan (HDHP), then you can contribute to a HSA. HSA’s allow you to put money in an account you can later use to pay for most medical expenses. One of the big benefits, as long as you meet the right criteria, is a very unique tax advantage. You receive a tax benefit up front when you put money, the money tax-free while in the HSA, and then comes out with no taxes later on. By meeting the government’s criteria, you can get some great tax advantaged benefits while also covering future medical expenses. This could be a good time to either start or up the amount you’re taking out of each paycheck to put in an HSA.
2. Examine Spending
One of the most impactful levers in your household is how you spend your treasure. The steps below aren't necessarily to cut spending (Although that's rarely a bad idea) but identifying ways you could cut back if needed.
Do a Spending and Budget Audit
Make time with your spouse to sit down and review your family budget. Your family doesn’t have a budget? Time to make one. Make it a point, as you look a spending together, to identify needs vs. wants and things you could cut out if needed. You can use an app or website, but a notepad will work just fine as long as you do this step together.
There’s no better time like the present to find easy ways to save on recurring bills. It’s easy to get used to a bill on your card or bank account every month, but you have control over more than you realize. Monthly expenses are an easy place to start. Click below for some ideas.
Identify planned large purchases
As husband and wife, sit down and list out any large purchases you have planned over the next 6 months. Consider ones you might want to avoid or delay. Even a delay of a few months can allow you to get a on a firmer financial footing.
3. Make a debt plan
Debt can be demoralizing even in good times. If things get tight in your financial life, debt can make the overall situation worse. Don't ignore it, make a plan.
Do a Debt Audit
Make a list of outstanding debts. Don’t forget to include debt like credit cards, student loans, and more as you put this together. There’s no better time than the present to get started on paying down debts. Don't be discouraged by the size of the problem. Make an attainable plan on how much you're going to put, each month, toward paying it down. Make sure you prioritize any debt with crazy high interest rates like credit cards.
In the grand scheme of things, interest rates in the fall of 2020 are extremely low. While that makes things difficult for your savings account, it can help elsewhere. You could benefit by refinancing debt that you plan to keep for a while and pay less interest. If you plan to stay in your home for a while (several years or more), it might be worth checking rates to see what is available.
4. Stay Safe
Guard your personal information and personal data. Bad guys capitalize on events in the news to prey on people like you. This is even more important if your family is spending more time online. Fight back with these tactics.
Watch out for scams
When the world gets strange, bad guys try to take advantage of others. It could a scammer trying to leverage headlines or current events. It could also be someone trying to use your generosity against you with a charity scam. Stand vigilant and be safe.
Urgency is your enemy
Scammers want to keep you from thinking too much about what they want you to do. One of the thief’s primary tactics is pushing you to do something quickly by creating a sense of urgency. Look out for threatening deadlines or dire consequences if you don’t act now. A common version of this is a phone call masquerading as an IRS agent. The phony “agent” will tell you this is your last chance to pay your overdue taxes, but if you provide a credit card you can avoid going to jail. Slowing down is your best tactic when presented with this type of fraud. Take a moment to catch your breath and think about what might be behind this urgency.
Beware authority or impostors
This technique tries to goad you into action with perceived identity of someone you think has your best interests in mind. A common version of this is an email impersonating a family member in peril. Another version is when a fraudster pretends to be from a company you do business with and is using that knowledge to get information or money out of you. Be skeptical about who you are dealing with.
Remember caller ID can be unreliable
Caller ID can be spoofed and sometimes lures people into a false sense of security. Don’t a trust a number or the name provided by caller ID. The best tactic here is to not ever believe caller ID.
Validate through reliable sources
When you are skeptical, take time to validate information with a reliable source. For example, if you are interacting with a new business, check to see if you’re dealing with a legitimate enterprise. This requires more than just a website for the business. Places to check can include your state Attorney General, the Better Business Bureau, or the Federal Trade Commission. Online reviews help sometimes but remember that anyone can fill these out. The best tactic here is to use only reliable sources when checking out another party.
When in doubt, seek help
Two heads are better than one. If you’re unsure, ask a family member of friends to think through your skepticism. Sometime, this should be an expert. Don’t be afraid to get help because it requires you to seek someone who knows the subject. Many of us are hesitant to do this for fear of being embarrassed. Would you rather have a friendly conversation with someone on your side or be separated from your money by someone dishonest. The best tactic here is to seek counsel from someone else.
Be careful when money up front is required
There are legitimate cases when you do business and money is required up front for a product or service you want. Scammers know this and want to trade on the trust you extend to legitimate businesses. If all or a portion of needs to be paid up front, ask lots of questions. Look for a written statement or contract about what is being promised. We would all like to do business with just a handshake, but it’s not a good idea. Read the WHOLE contract or terms to ensure you understand what you’re getting yourself into and then keep a copy. The best tactic here is to “get it in writing.”
Don’t answer calls or texts requesting information
Scammers use phone calls and texts as ways to get information they can use to scam you. One form of this is a text asking you to verify the answer to security question to get more info. The scammer then uses your answer to get into an account like your bank and wreak havoc. Ignore the text and contact the company or person with a number you know to be legitimate. The best tactic here is to go directly to the source of the party asking for information.
If it seems too good to be true…
The last line of defense is your instinct. If something seems to good to be true, then it likely is. Is it more likely that you have an unknown uncle who was a Nigerian prince trying to send you money or that some dishonest person is trying to hoodwink you?
“Who is going to believe a con artist? Everyone, if she is good.” Andy Griffith
5. Don't Lose Focus
Your instinct, when the world seems crazy, might be to abandon long term goals. Don't do that! Your dreams for the future were great when you dreamt them up and no less great now. Persevering, while not always easy, is important.
You might be thinking about putting a stop to the amount coming out of each paycheck to go into a 401k of other retirement plan. Don’t do that. Here’s why.
This as good a time as any to check a few things in your 401k. One of the most important decisions in your 401k is to be diversified as Ecclesiastes tells us. This means how much you have allocated between choices like stock and bond mutual funds.
Saving for College
It might be easy to stop saving for goals like college if things seem grim. Pressing forward at times with less than favorable headlines might be difficult, but can pay off in the long run.
A word about the words of gurus
You might hear financial gurus on the TV or a friend opining on what they think something like the stock market might do in the future. This might come up as advice to sell one day and buy back another or some combination thereof. Here's the thing about advice like that. It's often wrong. Many studies have shown that trying to outsmart everybody with the right timing rarely works. A long term plan (made for good times and bad times) has much better odds for success whether it's your retirement, kids' college, or anything else.
Where to go from here?
As you think about how to get your family ready for fall, it might seem overwhelming. As Paul told the church in Corinth, stand firm.
"Therefore, my beloved brothers, be steadfast, immovable, always abounding in the work of the Lord, knowing that in the Lord your labor is not in vain." 1 Corinthians 15:58 ESV
If you think your family might need some more help, we'd be honored for you to consider Intrepid Eagle Finance. We specialize in helping Christian families navigate their financial life. Click the button below and grab a time to speak with us. It's free, you don't have to commit to anything, and you can do it from home.
How much time do you and your spouse plan to watch Netflix or Disney Plus this week? Could you give up just one episode of one show to see if your family might benefit from getting some financial help? What would it mean if your family's financial life were more organized, more confident, and less stressful? Find out and see.