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7 Tips to Withstand the COVID-19 Economic Storm
Monday, June 1st 2020, 11:35 AM

How to Survive a Financial Crisis

Brandon, United States - May 29, 2020 / Accurate Tax & Bookkeeping Services /

On December 31, 2019, Chinese health officials informed the World Health Organization about a cluster of 41 patients with mysterious pneumonia symptoms. Twelve days, the first death was recorded. On February 12, the death toll from COVID-19 in China topped 1,100.

On January 20, the first case was reported in the U.S. in Washington State. On February 29, 2020, the U.S. documented the first death on American soil. March 11 saw the WHO declare COVID-19 to be a pandemic, and by March 13, President Donald Trump declared the situation a national emergency.

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On February 12, the Dow Jones Industrial Average hit a historic high of 29,551. That same day, the death toll in China topped 1,100. The next day the market began a steep decline culminating on March 16, 2020, with the largest point drop in U.S. history of 2,999 to 21,237 or 28% of the market’s value. This figure represents many trillions of dollars.

Professional money managers, as well as casual investors, scrutinize the Dow Jones Industrial Average to obtain a high-level view of the markets. Referred to as simply “the Dow,” it is a price-weighted average of 30 blue-chip U.S. stocks that are generally regarded as the leaders in their respective industries.

Amid the current financial carnage, observing the index can help in determining the damage COVID-19 is inflicting on investment portfolios, and whether the downturn is a short-term consequence of supply chain disruption and skittish consumer demand or a broader symptom of a bull market that has ended.

With an economy of unknowns driven by fear and anxiety over an invisible invader, there is still hope. Keep to the basics. They never fail. Here are 7 tips to weather any economic storm.

  1. Do not spend more than the paycheck.

Limit spending to less than earnings. Simple math demonstrates the effectiveness of this principle. This baseline practice always works. In the turbulent times of a national emergency, it pays to decrease discretionary spending, as these monies may be needed to purchase the staples. As a general financial life principle, frugality is foundational to wealth acquisition and preservation. In times of crisis, it is essential for survival.

  1. Save first, spend later.

Save a portion of personal income first before anything else. Take savings off the top. Live on what remains. Amazingly, the little bit saved and invested each month will grow, slowly at first and then more swiftly.

  1. Create and protect an emergency fund.

Many people think that an emergency fund just needs to sit passively in a savings account, earning barely any interest. In fact, an emergency fund can be in an investment vehicle.  Liquidity is the key. Understand the volatility of the investment vehicle and be comfortable with the risk factor.

  1. Manage liabilities and expenses.

Understand needs versus wants. Financial adviser and motivational speaker Brian Tracy states, “The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term is the indispensable prerequisite for success.”

  1. Reduce debt.

Using the cash jar or cash envelope system is an excellent method to help reduce debt. Accounting for every dollar earned and spent ensures that money is being put towards a goal, whether that goal is to pay off debt or to accumulate savings.

  1. Plan to succeed financially.

Plan the work and work the plan. Do not confuse a financial master planner with an investment advisor. The difference is important to understand. A financial planner acts as the quarterback in coordinating all aspects of the client’s financial life. This coordination includes the rate of return needed to earn on investments. How much should be put into savings? Is the right insurance in place? Are the wheels of estate planning in place and rolling? A qualified financial planner helps people create a plan. An investment advisor will help clients follow their plan and achieve their goals. In the end, each individual must understand their investment plan and make sure it has a solid process with clearly defined and achievable goals.

Albert Einstein was one of the greatest scientists who ever lived. He was not running low on common sense, either. He said, “If you can’t explain it simply, you don’t understand it well enough.” In this case, that goes for a financial plan.

  1. Foster good habits.

Pursue a healthy financial lifestyle. Just like working out and eating smart, it may take months for results to be noticeable. In the long run, it will be well worth it.

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For more information about taxes and bookkeeping services, contact Accurate Tax & Bookkeeping Services by phone at (813) 655-9702.

Contact Information:

Accurate Tax & Bookkeeping Services

710 Oakfield Dr Ste 125
Brandon, FL 33511
United States

Greg Menia
https://brandonaccountant.com

Original Source: https://brandonaccountant.com/press-releases

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