Financial Planning During Uncertain Times

These past few years have been quite historic on multiple fronts.  Today we are facing the decline of a global pandemic.  We have seen historic highs and lows in the market.  Now we find ourselves on the brink of a global conflict with a nuclear power. 

Stop and soak that in for a minute. 

Few could have predicted that we would be here in 2022. 

With the market volatility that will continue over the foreseeable future, what should you be doing to continue to protect your assets?  Here are some tips for financial planning during uncertain times. 

Reevaluate your budget

One thing to consider during uncertain times is your monthly budget.  I previously wrote an article on 5 quick ways to tighten up your budget.  That article can act as supplemental material for this section.  When it comes to personal finance during uncertainty, reallocate funds in the budget can be helpful. 

This does not mean to pinch pennies exclusively.  Sometimes during strife, allocating funds to aspects of the budget that alleviate anxiety can be helpful as well.  Should you take an extra date night this month?  Do you need to make sure you are going to an exercise class with regularity?  Can you allocate enough for family entertainment?  These are often welcome distractions. 

Look into your budget…where is your money going?  Are you meeting the goals set by your financial plan?  If you are, determine where you could reallocate funds to slightly boost your quality of life?  If you are not meeting the goals set by your financial plan, where can you make changes to achieve these goals? 

Strengthen your emergency fund

One of the many things to consider during market volatility is your risk tolerance.  This will vary by individual and by financial footing.  I have previously written a post on why an emergency fund should be your first financial goal.  I think having an emergency fund is a priority for a multitude of reasons.  The article mentioned will describe those reasons in detail. 

However, for the purpose of this topic, it is vital to have an emergency fund in uncertain times.  It can be used to offset unexpected expenses.  Sometimes markets can undulate greatly and having a sum of money that is less affected can alleviate anxiety. 

One thing to consider during hard times includes what amount of savings allows you to sleep at night?  For some, that number can be as little as one month’s living expenses.  I normally encourage at least 3 months living expenses.  If you are an individual who has felt the difficulties of a bear market multiple times, then maybe you feel more comfortable with 6 months living expenses. 

During trying times, reflecting on your financial security and asset allocation can be an important task.  If you find yourself feeling more comfortable with a larger sum in the emergency fund, consider diverting savings here first.

Invest!

The uses of an emergency fund act as a great segue to this next topic…investing!  Investing during a bear market is a great investing philosophy.  For those of you with an opportunity fund, trying times can be great for investing.

The idea here is that when you invest into stocks during a bear market, you are essentially buying shares at a discount price.  For example, with mutual funds (think indexing the S&P 500) you will get more shares for the price when the market is in a recession.  Most of those stocks will recover with time, and you will reap the benefit of your discount stocks growing! 

Now, this can be a touchy topic during market volatility so this may not be possible for everyone.  Returning to the topic of an emergency fund for a moment, if you feel you have a healthy sized emergency fund, it can be argued to put a portion of that money to work in the economy, especially if stocks are on sale!  Again, see my previous post on Emergency funds to learn more. 

Stay the course…

Ahh the words made famous by Jack Bogle, founder of Vanguard.  His words could not ring truer than now.  If there is anything that history has taught us, it is that “time in the market is better than timing the market.”

What I mean by these cliché sayings is that the best plan… is to not change your plan!  There will always be market volatility.  Further, multiple studies have proven the fact that no one can predictably beat the market long-term.  It is for this reason that we recommend you continue to execute your financial plan. 

If you are focused on paying off your medical student debt, continue to do that.  If you are maximizing your retirement accounts, continue to do that.  If you are building up your emergency fund, stay the course!  Much of the anxiety that comes during uncertain times spawns from fear.  Fear of the unknown, fear of the future.  All of this is natural, just avoid making any drastic financial changes based on fear.  If history has proven anything else, it is that we will get through this together. 

Be grateful

Last, but certainly not least, is a detour from the financial norm.  There is no need to beat around the bush on this one…we are living through historic times.  We are in a profession that has been plagued by relentless disease, burnout, personal and professional strain for years.  All of this we powered through just to exit to an evolving global conflict. 

No one could have predicted this.  Our profession does not just handle physical maladies, but the mental and emotional too.  All professions and specialties in the healthcare field are making a significant contribution to humanity as these times trudge onward.  Remember how important your role is in the greater good, and be grateful. 

As a young physician, a husband, and a father to a beautiful daughter, I too can feel overwhelmed.  I could have never imagined that the early portion of my medical career would be defined by a global pandemic.

Here is a video of ‘The Last Lecture’ by Randy Pausch. It is just over an hour in length, but well worth the watch. I find it incredibly grounding as it applies to remaining grateful in your life.

Take home points

I have spent countless hours transitioning The Motivated M.D. from an idea to a reality.  So many hours spent on my computer thinking and writing about personal finance.  I love every minute of it and it has proven to be very therapeutic for me, but I have a life outside of this. 

I am a hard-working physician trying to juggle family, finances, medicine, and a blogging dream.  I am known to carry too much on my plate.  It is unfortunate that it takes our current global climate to remind me just how incredibly lucky I am.  To have the life I do, the income and profession to achieve the goals I write so regularly about.  Most importantly, to have a loving wife and a healthy daughter. 

It may seem different on my website, but if you take one thing away from today’s post, take this:  It is not only about money.  Money is absolutely a tool that you should sharpen.  Money, if utilized intelligently can create opportunities.  Opportunities that allow you to prioritize the things that really matter in life… like time. 

Time to make your daughter giggle. 

Time to tell your wife how much you love her. 

Time to just sit back and enjoy the taste of an ice-cold IPA. 

Stay motivated!

The Motivated M.D.

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