Strengthen Your Finances With These Tips From 'How To Money'

On this episode of How To Money, Matt and Joel discuss the various financial lessons they’ve learned throughout the pandemic so far. Covid-19 has put a bright spotlight on several aspects of society we should be rethinking – they discuss childcare and homeschooling, and what employers can be doing to help, as an example – but with millions of Americans experiencing unemployment for the first time, being furloughed and uncertain about the future of their job or perhaps even their career, or just being aware that a single hospital trip could wipe out their savings, the guys want to highlight the personal finance lessons we should be learning from this time, so we can put ourselves in a stronger position to weather any storms in the future.

The first lesson? “Emotions influence how we handle money in a major way,” Joel says, perhaps more than we realize, and could cause us to make a catastrophic financial decision that leads to even more stress and mental anguish. Have a trusted friend or professional advisor to bounce ideas off of before you commit, just in case. Another thing that looms large is the absolute necessity of having an emergency fund. While the stock market was doing well, people were likely to advise you to invest money rather than saving it, because you could earn more in the market. But Matt and Joel are firm believers in having six months or more of your monthly expenses saved in the bank before committing money elsewhere. Spend some time conducting a “financial fire drill,” as Matt calls it, going through your budget and figuring out what expenses could be cut in a pinch, and start putting aside anything you can to ensure you can keep a roof over your head in an emergency. And while paying off debt is extremely important, don’t do it at the expense of your emergency fund. “The top priority should be cash in the bank,” Joel says. 

Millions of us learned that our jobs aren’t safe, as Matt himself did when it came to the wedding industry. It’s important to diversify your income streams, ideally before you need to, so you can be flexible in a changing world. Diversifying our investments is essential, too, as the entire country discovered when the pandemic crashed the stock market. Instead of single-stock investing, the guys prefer “buying the entire stock market” so you don’t have too many eggs in one basket. Another lesson to take away from the pandemic is to prepare for the inevitable. Write your will, get life insurance, make sure your spouse or partner knows where the passwords are to the joint accounts, and talk about how to handle things when you’re gone. “It provides so much peace of mind in the here and now,” Joel says. “It’s not a fun conversation, but an essential one.” Get all these great financial lessons and many more on this episode of How To Money.

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