Young adults in particular should be careful about their finances during the ongoing coronavirus pandemic. This is considered to be a once-in-a-lifetime event that no one could have possibly predicted.
However, things might seem a little familiar for some folk, especially those who experienced the Great Recession that happened in 2008.
Lines are forming around food banks, unemployment is on the rise and many people are scared to take a peep at their stock portfolios.
In other words, this isn’t a time to let your guard down, especially when it comes to your finances. The best thing you can do is get your ducks in a row so that you’re not caught unprepared.
Here are 3 crucial things you should do with your money at this time:
Take Advantage of Your Employee Stock Purchase Plan
If you work for a publicly traded company, you may be able to participate in your company’s Employee Stock Purchase Plan, or ESPP. This allows employees to purchase company stock shares at a discount, which is usually at 15%.
This would enable you to claim an additional 15% on top of the discount that comes with buying stock if your company sells their shares off.
Max Out Your Retirement Contributions
Are you one of those who has a tendency to max out your 401(k) contributions each year? If so, this isn’t a bad time to accelerate those contributions and allow them to accumulate in a stable value fund or money market.
If you do this, that means when the next buying opportunity becomes available, your dollars will already be in those accounts and ready to go.
You can also consider accelerating any funds to a Roth IRA or traditional IRA. Keep in mind that the IRS has a maximum contribution allowance of $6,000 for 2020.
Keep a High Credit Score
If you have a high credit score, do everything you can to keep it maintained. During a recession, the Federal Reserve will likely lower interest rates in an attempt to lure people into borrowing money and consuming products on credit.
When it becomes cheaper to borrow, more opportunities will arrive, such as the chance to refinance student loans, auto loans and mortgages.
Being able to save on interest payments is rarely pursued, however. But, the reduced debt payments should be looked at as a chance of a guaranteed return.
In other words, you should take advantage of this opportunity while you can, if you’re at all able to.