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Five Reasons Why a Financial Plan is Important During a Crisis

By: Kelly Welch, CFP®, Wealth Advisor at Girard, a Univest Wealth Division

“Are we going to be OK?” This is a question many families and individuals are forced to ask themselves in an environment where the market remains volatile, the job market is uncertain, and we wait for a biological solution to COVID-19. While we cannot plan for every unforeseen event (i.e. pandemics, natural disasters, hitting the lottery), we can put a plan in place that guides our financial decision making through tough times.

Here are the top five reasons a financial plan is important during a crisis:

  1. Your spending timeline is already created. With a proper financial plan, you typically have identified your short-term and long-term goals. Identifying how much you are going to spend is important but when you will spend it is just as significant. Being aware of your short-term goals allows you to establish and maintain an emergency fund for short-term spending and extraneous circumstances, like a crisis.
  2. You have prioritized your budget. By compiling your expenses, you can group them into necessities and wants. During this crisis, we have all learned that keeping a roof over our head and food on the table (and toilet paper in the pantry) are necessities. Timelines of “wants” may need to be flexible. Taking a trip to Europe is a nice desire but taking a trip to Target is more realistic. You may question if pushing off buying the new car is a prudent decision. Update your plan to see. Having already identified your expenses, you can adjust your financial plan confidently.
  3. There are less surprises. A typical financial plan will go through the good, the bad, and the ugly. We know that markets generally go up more than they go down, but they do go down. It is important to know what your financial picture looks like during tumultuous times like we are experiencing now. Having a good idea ahead of time what changes you may have to make (less 401k contributions, not funding 529 plans for a year, renovating your home next year) helps take the emotion out of navigating your finances during a crisis.
  4. A plan allows you to be advantageous. Creating or revisiting your plan during a crisis may allow you to take advantage of an economic downturn. Do you have too much cash on the sidelines? It could be an opportunity to invest for the long term. Is your mortgage rate higher than the market? It could be time to refinance. Being in tune with your plan can potentially give you confidence to make bolder decisions that could pay off in the long term. 
  5. A plan helps to give you confidence and peace of mind. Having a financial plan is like following the Yellow Brick Road. At times, you’ll encounter the Cowardly Lion and the Wicked Witch of the West but there is a pathway for your financial life. You’ve set guidelines as to how you intend to grow your wealth and save for the future. During a crisis, you may turn on the TV and worry but it’s important to remember that everything is relative to something. When faced with uncertainty, you can turn back to the plan to remind yourself of what you put in place and why.

If you’re looking for guidance or assistance with your financial plan, the advisors at Girard are here to help. Contact us to have a conversation about your plan.


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This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. The information in this article, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.