8 Things You Can Do to Prepare Financially for Unexpected Circumstances

Jeff Bernier |

By Mona Fahmy

In our July quarterly team meeting, we were asked to think about lessons learned and takeaways from the first half of this year. As we took time to stop and reflect, I immediately thought of stock piling toilet paper and hand sanitizer! And the media warning us to BE PREPARED! But, as I started to recall the conversations I was having with family, friends, and clients, I noticed a pattern emerge:

Those who had a plan in place were better equipped to handle the changes and uncertainties that occurred due to the COVID-19 crisis.

What was true for family, friends, and clients was also true for our firm, TandemGrowth. Back in 2013, we began making significant investments of money and time into improving our technology, systems, and processes. While so much of life as we know it changed in mid-March, because of these investments, our transition to remote working was seamless. We easily communicate and collaborate with our team members and clients effectively from home or alternate locations. While we prefer getting to visit in-person, our preparedness proved to be a great advantage for those clients who prefer a “virtual” meeting or staff who may have to juggle children learning virtually at home.

As a firm, we made a strategic decision to reach out to every client beginning in late March when financial markets, economic news, and COVID-19 updates continued to be disheartening. Again, the pattern emerged:

Those that were the most prepared, even in a time of great uncertainly, handled the challenging environment so much better.

How did TandemGrowth help its clients prepare? They had a goal-focused financial plan. They were able to maintain perspective knowing that, while the plan did not contemplate a global pandemic, it did anticipate bear markets and recessions occurring – as usual. 

We've developed the following list to show some of the ways you can prepare for unexpected circumstances:

  1. Live on a realistic spending plan (you know, the “B” word - budget). Spend less than you make. This year many of our clients are saving money as travel and many dinners out are cancelled. (Could we get an uptick to the economy when pent up demand returns?)
  2. Protect against things that can go wrong with the proper amounts and types of insurance.
  3. Keep emergency reserves – a “rainy day” fund – of at least 3 months’ of expenses.
  4. If in retirement, keep 2-3 years’ worth of spending in a “short-term” portfolio.  This helps clients sleep at night and allows the long-term portfolio to be invested in higher returning but more volatile asset classes.
  5. Keep a broadly diversified portfolio with adequate exposure to equity investments that can create a rising income stream in retirement balanced with fixed income investments for “defense”. 
  6. Keep a long-term perspective.  Your investment horizon is your life expectancy.  For most of us, that means many years participating in the global capital markets.  Don’t let short-term noise upset a multi-decade investment strategy.
  7. Ensure that your estate and tax plans are reviewed periodically and up to date. (many estate planners have noted an increase in document requests since the pandemic began)
  8. Focus on things and people that matter most and don’t waste time obsessing about things that cannot be accurately forecasted or controlled.

This list is certainly not complete, but you get the idea. Ben Franklin’s axiom “an ounce of prevention is worth a pound of cure” has certainly proved true in this year! With a good plan in place you can spend your time in more fulfilling pursuits like home projects, home schooling your kids, or figuring out how to make the camera work on your next Zoom call!

For the last 22 years, I have been helping clients create clarity and confidence to live their best life. If TandemGrowth can be a resource to help you or someone you know prepare for what’s ahead, please do not hesitate to reach out. Click here to schedule a no obligation, complimentary call today!

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