Financial Planning Lessons from the Covid-19 Crisis

Leslie Beck |

None of us expected an economic upheaval spawned by a health crisis as the year began.

As I discuss some of the lessons and takeaways from the Covid-19 crisis, you’ll probably recognize some of the themes. Let’s not forget that the fundamentals–the core financial precepts–are always the building blocks of any credible financial plan.

  1. Money at the end of the month. Saving for an emergency cannot be underestimated. Three to six months is optimal. But there is an added benefit–financial peace of mind.

It’s reflected in the proverb “The borrower is servant to the lender.” It’s not that I would counsel against a mortgage for a home or a reasonable loan for a car. But accumulation of wants (not needs) through the use of debt doesn’t bring contentment.

Instead, it brings stress. I have seen it over and over. You want money left at the end of the month, not a month left at the end of your money.

A financial cushion eliminates one of life’s worries.


  1. Wants vs. needs. Many of us have learned to do without certain things during quarantine. Whether we wanted to or not, we were forced to cut back on certain items.

Ask yourself this question, “As businesses reopen, are there things I can do without? Can I continue to cutback and still maintain my lifestyle?”

Many of our entertainment options have been curtailed. As we emerge from our homes and businesses reopen, are there items that can be trimmed from your budget permanently?

It’s not a cold turkey approach, i.e., no more eating out, sporting events, travel, or entertainment. But can we reduce expenditures on some items without sacrificing our overall lifestyle?


  1. Diversification and tolerance for risk. We’ve just witnessed an unusual amount of stock market volatility. Calling it a rollercoaster does not fully capture the experience.

The major indexes have erased much of their losses. Yet, how did you fare emotionally when stocks took a beating. Now is the time to reevaluate your tolerance for risk. We’d be happy to assist and make any adjustments as they relate to your longer-term financial goals.


  1. Expecting the unexpected. From its March 2009 low to the February 2020 high, the bull market ran for over 10 years (measured by the S&P 500 Index). We know bear markets are inevitable, but I recognize that the onset of a steep decline may be unnerving.

Nonetheless, a well-diversified portfolio of stocks has historically had an upside bias. That upside bias is incorporated into the recommendations we make, even as our recommendations are tailored to your individual circumstances and goals.

Further, a healthy mix of fixed income helped cushion the decline. While we monitor events and the markets over a shorter-term period, let’s be careful not to take our eyes off your longer-term goals.

Be proactive, not reactive

The steps above are a broad overview and individual circumstances may vary.

Taking inventory is critical. It’s half the battle. Be proactive, not reactive. You may find you are in a much better position than you realized. As always, we are here to help.

I understand the uncertainty facing all of us. We are grappling with an economic and a health care crisis. It’s something none of us have ever faced. If you have questions or concerns, let’s have a conversation.