ANDERSON COOPER joins Kelly and Ryan. Financial expert JEAN CHATZKY shares steps to take toward financial resilience.
=======================================
Steps Towards Financial Resilience
…with Financial Expert, Jean Chatzky
Many of us are facing tough financial choices right now. No matter what, they all seem to feel like bad decisions. How do you manage them so that they do the least damage to your long-term financial security?
You need cash! Do you pull money out of your 401(k) or maybe, at least, borrow from it?
Actually, the better bad decision is to stop contributing in the short term.
You are petrified the markets are going to plummet. Do you pull your money out of stocks?
Actually, the better bad decision is to move just some of your stocks to bonds or cash right now -- just enough to let you sleep.
You are planning to move, or retire. Do you still do it?
Actually, now is not the time to make long-term, irreversible decisions if you can help it.
You are feeling in light of recent events that you want to hoard cash at home? Good move?
Actually, not so good. This isn't a hurricane -- you actually are likely paying all your bills and spending digitally. Keep a couple of weeks' grocery money in cash and the rest in the bank.
Pandemic moneysaving moves you should keep forever…
Saving more…
During April, the savings rate in America shot up to 33%. To put this in perspective, the prior record was 17.3% in the mid-1970s. Of course, once we are out and about again, this savings rate isn’t going to be sustainable. But we all need to make sure that we create emergency cushions for the future (Bank of America said checking accounts have 30-40% more money in them than they did 12 weeks ago, so that’s a start). And then we want to be sure that we are putting money away for the long term. The goal has to be to save 15% of what you earn (that can include matching dollars you get from your employer) and the best way to save is automatically – by automatically transferring $$ from checking to savings each time you get it. That way you don’t have to make a good decision to save each time you do it.
Cooking in…
If you spend $50 a week eating out, that’s $2500 a year – half the food budget of the average American. Many of us, once you add in all that take-out, spend far more. Cooking is far cheaper. The average meal out costs about $13.50. The average meal you make, $4. And if you eat leftovers for lunch or another dinner, you save more. But it’s not all or nothing. We love our restaurants and want to see them come back. Just swap two meals out a week for cooking or leftovers and you’ll save about $1,000 a year.
Walking and/or other free exercise…
Whether you were used to spending $50 a month for a gym membership, or $20 or more for boutique exercise classes, that was money you saved during coronavirus (at least if you put your membership on hold.). You may want to continue this free (or cheaper fitness regimen). Personally, I like my zoom pilates classes – they’re more convenient and cheaper than going to class. The other reason to keep walking (or whatever) if you picked up an exercise habit during the pandemic (as well as to keep cooking) is the benefit to your long-term health. 75% of our healthcare dollars go to managing chronic diseases according to the Cleveland Clinic. The way to avert chronic disease is to: Keep moving (i.e. exercise), eat healthy, avoid toxins (i.e. don’t smoke) and manage your stress (exercise helps with that, too.)
Paying attention to what you really use…
Being at home, you got a crash course in a) what things you really use and b) what you really care about. Getting rid of the ones you don’t can save you money if you’re cancelling streaming services or subscriptions you don’t use, for instance. You can also make some dough by selling things you know you’ll never wear again…or by selling things you’ll never use again.
Making estate plans, wills and healthcare/financial proxies…
Way too many lives were lost to coronavirus and more are likely to come. It was a wake up call for people to make sure they had at least a simple will (naming guardians for their children) and healthcare and financial proxies so that someone else could make financial decisions for them if they were unable to do so for themselves, as well as living wills, which give doctors and hospitals guidance about whether or not you want life support. If you don’t have these, get them ASAP.
=======================================
Steps Towards Financial Resilience
…with Financial Expert, Jean Chatzky
Many of us are facing tough financial choices right now. No matter what, they all seem to feel like bad decisions. How do you manage them so that they do the least damage to your long-term financial security?
You need cash! Do you pull money out of your 401(k) or maybe, at least, borrow from it?
Actually, the better bad decision is to stop contributing in the short term.
You are petrified the markets are going to plummet. Do you pull your money out of stocks?
Actually, the better bad decision is to move just some of your stocks to bonds or cash right now -- just enough to let you sleep.
You are planning to move, or retire. Do you still do it?
Actually, now is not the time to make long-term, irreversible decisions if you can help it.
You are feeling in light of recent events that you want to hoard cash at home? Good move?
Actually, not so good. This isn't a hurricane -- you actually are likely paying all your bills and spending digitally. Keep a couple of weeks' grocery money in cash and the rest in the bank.
Pandemic moneysaving moves you should keep forever…
Saving more…
During April, the savings rate in America shot up to 33%. To put this in perspective, the prior record was 17.3% in the mid-1970s. Of course, once we are out and about again, this savings rate isn’t going to be sustainable. But we all need to make sure that we create emergency cushions for the future (Bank of America said checking accounts have 30-40% more money in them than they did 12 weeks ago, so that’s a start). And then we want to be sure that we are putting money away for the long term. The goal has to be to save 15% of what you earn (that can include matching dollars you get from your employer) and the best way to save is automatically – by automatically transferring $$ from checking to savings each time you get it. That way you don’t have to make a good decision to save each time you do it.
Cooking in…
If you spend $50 a week eating out, that’s $2500 a year – half the food budget of the average American. Many of us, once you add in all that take-out, spend far more. Cooking is far cheaper. The average meal out costs about $13.50. The average meal you make, $4. And if you eat leftovers for lunch or another dinner, you save more. But it’s not all or nothing. We love our restaurants and want to see them come back. Just swap two meals out a week for cooking or leftovers and you’ll save about $1,000 a year.
Walking and/or other free exercise…
Whether you were used to spending $50 a month for a gym membership, or $20 or more for boutique exercise classes, that was money you saved during coronavirus (at least if you put your membership on hold.). You may want to continue this free (or cheaper fitness regimen). Personally, I like my zoom pilates classes – they’re more convenient and cheaper than going to class. The other reason to keep walking (or whatever) if you picked up an exercise habit during the pandemic (as well as to keep cooking) is the benefit to your long-term health. 75% of our healthcare dollars go to managing chronic diseases according to the Cleveland Clinic. The way to avert chronic disease is to: Keep moving (i.e. exercise), eat healthy, avoid toxins (i.e. don’t smoke) and manage your stress (exercise helps with that, too.)
Paying attention to what you really use…
Being at home, you got a crash course in a) what things you really use and b) what you really care about. Getting rid of the ones you don’t can save you money if you’re cancelling streaming services or subscriptions you don’t use, for instance. You can also make some dough by selling things you know you’ll never wear again…or by selling things you’ll never use again.
Making estate plans, wills and healthcare/financial proxies…
Way too many lives were lost to coronavirus and more are likely to come. It was a wake up call for people to make sure they had at least a simple will (naming guardians for their children) and healthcare and financial proxies so that someone else could make financial decisions for them if they were unable to do so for themselves, as well as living wills, which give doctors and hospitals guidance about whether or not you want life support. If you don’t have these, get them ASAP.
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