Financial Management Activities: Mental Bandwidth vs. Productivity

If the week of March 16 was when America started to shut down en masse, we are now concluding week #4 of holing up at home. It has not been pretty. Virtually every American has been negatively impacted by COVID-19 in one or more ways:

¨       Illness and death (medical and funeral bills)

¨       Job loss, furlough, or fewer work hours (reduced income)

¨       Investment account losses

¨       Social distancing measures (work/school at home and fewer family visits)

¨       Work-life balance issues (e.g., overseeing home schooling while working at home)

¨       Cancelled trips and activities (e.g., requesting refunds)

¨       Logistical challenges (e.g., shopping and banking)

Conversely, there have been some positives including savings from reduced driving, childcare, auto insurance premiums, eating out, and other expenses. Extra time for exercise, family activities, and a slower pace of life have also been a plus.

Originally, I just planned to describe long-postponed financial tasks that we can do at home with extra time on our hands. I’ll get to those in a minute. However, I realized something. Despite media exhortations to use our extra time productively and evidence that bored people often become very creative with time to think, plan, and act, other research indicates that mental bandwidth gets sapped when people are challenged by poverty and/or economic concerns such as loss of income and juggling bills. As New York Times writer Taylor Lorenz noted, “we have much less attention, because we’re living through so much.”

The fact is…some people will be unable to put the following suggestions into practice right now and that is understandable. Your mental bandwidth is fried coping with COVID-19 impacts. Tuck this list away and do what you can, when you can. For those with extra time and a stable income who are riding out paper losses on investments and saving money by staying home, consider this 10-item “to do list” that I compiled with the help of social media friends who are acknowledged below:

¨       Prepare Financial Statements- Update (or prepare for the first time) a spending plan (budget), calculate your net worth (assets - debts), and complete a financial inventory to record important personal finance information.

¨       Compile Medical Data- Prepare a medical information binder with data (e.g., lab test results) for each family member. Also prepare a spreadsheet of medical bills, health insurance payments, and out-of-pocket expenses.

¨       Inventory Digital Assets- Use this Digital Assets Inventory Worksheet to record passwords, PINS, and such. If you haven’t done so in a while, consider changing your passwords or setting up a password manager program.

¨       Prepare a “Grab and Go” Box- Visit this Texas A&M AgriLife Extension website for instructions on steps to take and what to include. Also consider flash drives and/or cloud storage for digital copies of documents.

¨       Use Up Gift Cards- Shop now to support favorite retailers and restaurants and to hedge the possibility that they don’t reopen. Gift cards can be used online for retail goods and some restaurants are offering take-out.

¨       Repurpose Refunds- Document how much you are saving while working at home and save all or part of it. Spend refunds for event tickets and travel in other ways. Examples include home improvements and charitable contributions.

¨       Plug Spending Leaks- Review subscription services and cancel automatic payments for items that you are not using. Examples include magazines, satellite radio, and gym memberships.

¨       Shop Around- Take the time for legwork required for a “Rule of 3” comparison. Get price and service data for at least 3 insurance companies and cell phone, cable, and internet providers. Also consider tweaks to your investment portfolio.

¨       Plan Your Estate- Prepare or review and/or update your will, living will, and durable power of attorney. With almost 18,000 deaths (to date) from COVID-19, act on the current attention being paid to death and dying to provide for heirs.

¨       Plan a “Good Ending”- Do prudent things that are rarely done. Write your own obituary (to say what you want), plan your memorial service, and make a list of people and organizations to contact when you pass. Your heirs will thank you.

Special thanks to: Sarah Baughman, Robin Brumfield, Jenny Carleo, Julie Giglia, Michele Godfrey, Elizabeth Goldsmith, Laura Hendrix, MJ Kabaci, Kenny Lee, Terri Mayhew, Debbie Nelson, Brian Page, Laura Schneider Scot, and Linda Wilson.