With the threat of an economic downturn at hand, we understand our clients financial fears. This post addresses those concerns by examining how to help your clients recession-proof their finances. If you’re like most agents/advisors, keeping your clients protected is a top priority. But in the wake of a life-changing pandemic, protecting anything can seem like an impossible feat. Take heart knowing that their finances don’t have to take a fatal nosedive — even amid an economic slump.
1. Know their Financial Position
Any well-known financial guru — Dave Ramsey, Suze Orman, David Bach, etc. — will first tell you to take an honest look at their financial situation. Before you panic and reach for their mattress cash or empty their piggy banks, get up close and personal with their situation.
Choose to accept whatever financial position they are in, and understand that you can influence their life. It doesn’t matter if they have thousands of dollars in the bank or pennies hiding in their couch, you can help lend an element of control.
If they feel helpless or like a victim of the COVID-19 crisis, it’s only natural. We have all been impacted by this worldwide calamity. However, by using their money strategically, you can recession-proof their finances and protect their family from a heart-breaking struggle.
The first step is knowing where they stand financially. So, do your best to learn whether they will have a steady income in the future. Plus, research if they can get a break on any debts or utilities. The information you gather might not be ideal, but it will empower you anbd them to better face the future and formulate a better strategy.
2. Keep An Eagle Eye On their Cash Flow
Despite what the Monopoly playbook says, managing money only comes in handy in real life. In other words, cash flow is everything!
The thing is, the economic downturn has produced more unemployment than ever recorded. Therefore, having a significant or steady cash flow might be a “luxury” of the past. Still, that doesn’t mean you or they have to turn a blind eye to their incoming and outgoing money.
More than ever now is the time to keep a watchful eye on the money they have and make it go where it est serves them. That said, some of the wealthiest people alive have a habit of knowing what they spend their money on precisely. According to Entrepreneur, the average millionaire lives on a monthly written budget.
An excellent idea is to advise they follow the example of folks who have this money thing mastered. Don’t take their eyes off their cash flow for a second — even if it seems like a faint trickle.
3. Don’t Underestimate The Impact Of Side Gigs
The funny thing about knowing how to recession-proof their finances is that this life skill doesn’t depend on their full-time career. Sure, it’s incredibly helpful to have a stable job — but we’ve witnessed how quickly a novel virus can erase that security.
How do you hunker down and increase their cash flow without the certainty of a full-time career?
One relentless approach is to tap into other areas of work. For example, many people have made a living on gig work or side work. Have they considered freelancing (i.e., writing, consulting, graphic design), mowing lawns, and completing odd jobs for neighbors and friends.
Moneycrashers features a helpful review of profitable work in the gig economy. To recession-proof their finances means being as resourceful as possible. The gig economy thrives on resourcefulness.
4. Diversify their Income And Investments
With the gig economy in full swing and many companies making remote work a reality, people can remain at home to follow “shelter-in-place” orders more comfortably. But if they have kids at home, remote work can become a challenge in a matter of minutes.
Of course, having children at home isn’t the only challenge to continue working during a pandemic. It might be tricky to find full-time work, or perhaps their internet connectivity creates issues. Nevertheless, relying on one source of income or investment is a risky business.
An excellent strategy to tackle these disadvantages is to help them diversify their income and investments. The Balance advises using passive and active income, which means they can earn money when they are working and not.
During an economic slump, knowing how to recession-proof their finances is doable — but you must get creative. Suggest they tap into their hobbies and tone up their skills!
5. Face Risks Head-On
When COVID-19 hit our shores early in 2020, many people wanted to bury their heads in the sand. The only problem with this approach is that hiding or denying an issue only creates more significant issues.
As a result, the businesses that didn’t shutter held on for dear life by offering limited services. Families followed a similar strategy. People dropped services, such as cable TV or gym memberships. Unfortunately, some people panicked and canceled insurance policies without careful consideration.
Most folks forget that canceling an insurance policy often has ramifications down the road — no matter the type of insurance (i.e., life, auto, home). Sometimes, it’s more challenging to purchase another policy. Plus, you don’t always get a full premium refund. Paying for a loss out of pocket can be outrageous.
A better approach to recession-proof their finances is to play the long game. Protect their family and stick with their insurance policies. Remember, you can typically adjust their coverage instead of calling it quits. Life insurance is exceptionally crucial because it’s for their loved ones more than for theirself.
Take The Next Step
It’s tough knowing how to protect their family after the spouse is gone, especially with such a vast amount of information out there. But you can help!
To support you as you safeguard their financial security, We’ve created an up-to-date guide or parents who need life insurance. Our guide can help you with their long term life insurance goals, especially with a family to nurture at home.
Here at NSB Brokerage, we want to help you take care of your client family. If you’re ready to find a policy or a new strategy that fits their needs and their budget, we can help!
With access to all the top-rated life insurance companies, we work extra hard to get you the best life insurance rates, annuity, LTC and disability possible. We provide 24 hour turn around on illustrations.
Call us today to get your clients started on recession proofing their finances.
NSB Brokerage 262-781-8015