Diary of a CFP® Pro: January — Navigating the Financial Impact of a Global Disruption

This month’s insight from Marguerita Cheng, CFP® Pro: When the coronavirus pandemic closed businesses worldwide in 2020, it required almost everyone everywhere to lockdown. In 2022, we witnessed the start of a war by Russia, which impacted the global markets, oil prices, and more. Add to that concerns about the impact of global warming — not to mention anything tumultuous that is going on in your personal and professional life. It goes without saying that the impact on financial planning from this myriad of disruptions is dramatic.

Reality check:

  • Regardless of your income level, you can take steps to improve your financial position during these global disruptions.
  • Manage your spending responsibly. Streaming services provide entertainment for many people in lockdown but consider reducing or eliminating little-used subscriptions.
  • Be careful about online shopping and resist the temptation to overspend or engage in panic shopping.

What you can’t control: The pandemic is changing how people think about money. As a CFP® professional, I have seen the change in my clients, with some saying it feels like “a rug was pulled out from beneath them.” Depending on where you are in your financial journey, you might feel the same way.

What you can do: Despite the uncertainty of how the pandemic will affect your financial planning in the long term, there are steps you can take to build financial security for yourself and your family. The first thing to remember is to avoid panic.

Image by Paul Vanderwerf, flickr.com creative commons

I suggest you take a deep breath and focus on applying the following six strategies as you navigate the financial impact of the pandemic:

  1. Add to your emergency savings: As a financial planner, I always insist that people have sufficient emergency savings. Most people don’t. I generally recommend saving three to six months’ expenses in an emergency fund. Because of the uncertainty caused by the pandemic, I now suggest keeping a year’s worth of the costs saved in the fund. If you are unsure how to begin, start by trimming nonessential expenses and dedicate any extra money saved to build your emergency fund.
  2. Reconsider your debt strategy: Carrying debt, especially high-interest credit card debt. With the stock market volatility, interest rates have fallen sharply. If you have loans, it may be time to refinance at a lower rate. Look for a balance transfer credit card to secure a lower interest rate on credit card debt. If you have federal student loans, the government suspended most payments through September to provide some temporary debt relief.
  3. Give your budget a makeover: This situation is not normal. With great uncertainty about what’s next for many businesses, ensuring you can cover essential expenses should be your top financial priority. Reevaluate your budget to find new ways to conserve cash. I have been spending less money on gas, parking, and tolls while working from home. My daughter used to spend pay $12 per day on subway fares. That’s $60 per week or close to $250 per month that she is not spending while working from home. If you are in a similar situation, I suggest using the extra money to create a financial cushion you can rely on in the coming weeks and months.
  4. If possible, invest more: I advise against selling your investments right now. Many people have seen their portfolios decrease in value. However, the stock market will likely continue to experience volatility if you can afford to consider contributing more to your retirement savings and other investment accounts. Historically, we have seen the stock market always rebounds eventually.
  5. Refinance your mortgage: The Federal Reserve has cut interest rates, and that’s good news if you have a mortgage. With interest rates at an all-time low, consider refinancing. Even a 0.5% drop in your rate can save you thousands on your mortgage. It’s also an excellent opportunity to shorten the term of your loan. If you still have 18 years to pay on your home, refinance a 15-year mortgage to pay it off faster and save more money.
  6. Help when and where you can: Consider ways to help others if you can afford to. Find out if your community has a food bank and consider donating groceries or personal protective equipment. Support local businesses, restaurants, and cafés to provide revenue and help keep their doors open.

The bottom line: The economic downturn may significantly impact your financial planning if it hasn’t already. It’s not too late to prepare your finances for what’s to come. CFP® professionals are here to help you create or strengthen a financial plan and take control of your finances.


Photo by Photo by Thomas Cizauskas, flickr.com creative commons (top) and Paul Vanderwerf, flickr.com creative commons (center).

Stay tuned for next month’s installment of Diary of a CFP® Pro!

About Marguerita M. Cheng: Rita is the founder and Chief Executive Officer of Blue Ocean Global Wealth.  She has also been a spokesperson for the AARP Financial Freedom Campaign and a regular columnist for Investopedia & Kiplinger. Previously, she was a Financial Advisor at Ameriprise Financial and an analyst and editor at Towa Securities in Tokyo, Japan.

Certifications: CFP® professional, Chartered Retirement Planning CounselorSM, Retirement Income Certified Professional®, and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policymakers, and media about the benefits of competent, ethical financial planning. She serves as a Women’s Initiative (WIN) Advocate and subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination.

Awards: Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship. In 2017, she was named the #3 Most Influential Financial Advisor in the Investopedia Top 100, a Woman to Watch by InvestmentNews, and a Top 100 Minority Business Enterprise (MBE®) by the Capital Region Minority Supplier Development Council (CRMSDC).

Rita volunteers for several organizations: CFP Board Disciplinary and Ethics Commission (DEC) hearings, she has also served on the Financial Planning Association (FPA) National Board of Directors from 2013-2015 and is a past president of the Financial Planning Association of the National Capital Area (FPA NCA).

Click here to learn more about Blue Ocean Global Wealth and email Marguerita today!

Blue Ocean Global Wealth headquarters:

9841 Washingtonian Blvd., #200
Gaithersburg, MD 20878
301.502.5306 / 888.731.3117 (fax)