Rebuild Your Wealth

By The Lerner Group on June 22, 2020

With the uncertainty of the COVID-19 virus continuing to unfold following the reopening, we need to try and take control of what we can. These have been stressful times and at this point we need to focus on rebuilding our physical, emotional and mental health as well as our financial health. In this blog I will focus on the financial aspect, as that is my profession. With everything that has happened this year, it is important to review and readjust our existing plans. If you don’t have a plan, now is a good time to start. Let’s focus on what we can control!

To rebuild our wealth, we need to think about where we want to be long-term and the adjustments we can make in our financial lives to get there. We will begin with three steps on how to get started followed by three steps to help guide you on your own rebuilding journey.

How to get started:

1. Accept your new situation: This is a critical first step and can be very difficult to overcome. Sometimes when we focus so much on where we were or the high watermark of our portfolio that we become discouraged. We need to let go of that internal struggle and move forward. It’s time to have a conversation with your Wealth Advisor, reassess the end goal and track it step-by-step.
2. Review or create your net worth statement: This helps assess where you truly stand today. Sometimes we think we are worse off than we really are. Let’s build this quick and easy one-page statement; listing all of our assets and liabilities to see a snapshot of where you are today.
3. Adjust your wealth plan: If you have a financial plan in place already, that is great. A typical plan accounts for volatility in the market and even a recession. What it may not consider is the actions needed to respond to a pandemic or losing your job. Pausing to review the plan with your Wealth Advisor is a good idea to see what changes are needed to adjust to the current environment.

Here is an example: previously, your plan recommended saving $150k a year to get to the magic number you would like to reach. This year, due to a potential setback, you are not able to save the full amount or anything at all due to unforeseen expenses. This can mean that you need to adjust and look for other ways to reach your goal. One approach is to delay your goals by a year. Another is to increase your savings from $150K per year to $180K per year for the next few years if the desired retirement age is non-negotiable.

How to accomplish this:

1. Identify ways to cut back spending: In normal times we might suggest cutting back on extra spending, maybe going from dining out three times a week to two times a week. In these times, cutting back might mean delaying a larger purchase or trip.
2. Invest in the market: With the additional savings in step one, now is the time to invest a little more and take advantage of the effects of compounding. Money invested today can appreciate but that growth also compounds over time.
3. Invest in yourself: Investing doesn’t always mean buying a stock or a bond. Going back to school or getting additional certifications in your field is a great way to invest in your future; it will add value for years to come. There is always something we can learn and get better at and having additional skills over the length of your career can really add up.

Good luck on this journey to rebuild your wealth, We’re here if you need some guidance to get started or along the way!