One Year of COVID-19: How the Pandemic Proved the Importance of Working with a CFP® Professional to Create a Financial Plan

When COVID-19 was declared a pandemic in March 2020, many of us were caught off guard, especially when it came to our money. The effects of this virus exposed our financial position and tested our financial strength in numerous ways. If there’s one crucial lesson this pandemic has proven, it’s the importance of working with a CFP® professional to create a financial plan.

Before COVID-19 came along, nearly 40% of American families didn’t have enough cash on hand to cover a $400 emergency. Tack on a global health pandemic, record unemployment, and the lingering effects of racial inequality and what do you get? A perfect brew for financial disaster.

Here are some ways that one year of COVID-19 affected personal finances and proved the need to create a financial plan:

1. Pressure and anxiety around the loss or potential loss of income were high.

Even if you didn’t experience job loss or loss of income during the COVID-19 pandemic, you likely know someone who did. The pandemic impacted many but hit specific racial and ethnic communities more heavily than others. Black workers, for example, experienced disproportionately high unemployment levels. All individuals should consider working with a CFP® professional to create a financial plan and form a financial strategy to prepare should you ever lose your income in the future.

2. Many people realized they were one health crisis away from ruin.

This virus wreaked havoc on many families. Communities of color were hit especially hard, with contraction, hospitalization and death rates much higher than their white counterparts. With many minorities working in essential positions, the likelihood of contracting COVID-19 remains high. Those who lost jobs also lost the affordable health insurance coverage that might have come with these jobs. A CFP® professional can help ensure you have adequate medical insurance coverage in place and help you create a plan to have cash reserves to cover any shortfall.

3. People wondered now more than ever: what would happen to my family if something happened to me?

Many people lost loved ones to COVID-19, and those who didn’t may have considered estate planning more seriously during this time. There’s something about hearing a daily account of the number of deaths due to this virus that makes you want to get your estate plan in order. That meant doubling down on life insurance or updating the beneficiaries on their various accounts for some people. Your CFP® professional can help you cross your t’s and dot your i’s in preparing for the event of an untimely demise.

4. America’s moment of racial reckoning last summer further highlighted the disparities in wealth between different racial and ethnic groups.

Following George Floyd’s murder, many people began to learn about systemic racism and the policies that have hindered Black and brown communities in this country from building wealth. Issues like the persistent racial wealth gap and income inequality further compounded the adverse effects of COVID-19. Economically disadvantaged communities are less likely than their white counterparts to have the necessary assets or income to keep them afloat during periods of financial stress.

It’s never too late to take the first steps toward building a solid financial future. Ready to work with a CFP® professional to create your financial plan? Don’t know where to start? Find your CFP® professional today at www.letsmakeaplan.org.