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Lessons from COVID-19 — Plan Now for Career and Financial Surprises

Think for a minute back to January of this year. We were just starting to hear about a highly contagious novel virus that had originated in China and was starting to spread outside the nation’s borders. But few people seemed very concerned about this virus spreading worldwide and causing millions of deaths and economic destruction.

Of course, we know what happened next. The rapid spread of COVID-19 and worldwide recession and spike in unemployment that resulted from economic lockdowns are a drastic reminder of how unpredictable things can be. 

This unpredictability holds true even for white-collar professionals who seem to have secure jobs and steady income streams. One of the biggest lessons many people have learned from the pandemic is the importance of being prepared and planning for the unexpected when it comes to their jobs and finances.

Expect the Unexpected

If you have built a successful career and enjoy an income that’s higher than average, congratulations! But don’t assume that unexpected events couldn’t change all of this quickly and without warning.

In some ways, it’s even more important for high earners to anticipate and plan for unexpected surprises that those who earn less money. It can be easy for high earners to overcommit themselves financially by purchasing expensive cars and homes and living lavish lifestyles. Then, if they’re thrown a career or financial curveball, they find themselves unable to afford the lifestyle they’ve become accustomed to.

Instead of overcommitting financially, it’s often better to live below your means and save as much income as you can for a future rainy day. Many people strive to save between 10 percent and 20 percent of their gross income, but imagine the kind of emergency savings stash you could build if you saved 50 percent or more of your income. Having an emergency fund like this to fall back on could mean the difference between struggling and living comfortably if a career or financial shock occurs in the future.

Forget About “the Joneses” 

In today’s society, there can be a lot of pressure to maintain a certain lifestyle — especially among those who are high earners. This might mean driving a certain high-end vehicle brand, living in an exclusive community, joining a particular country club or vacationing in exotic locales.

Resist the temptation to “keep up with the Joneses” by indulging in these kinds of things if they aren’t important to you. This isn’t to say that you shouldn’t enjoy a certain lifestyle if your income affords it. But don’t spend money on extravagances like these just for the sake of appearances. Foregoing some luxuries like these will allow you to put more money in your emergency savings fund and leave you less exposed to a sudden job loss or income shock in the future.

Forgetting about the Joneses will probably mean having to say “no” to some things from time to time. And it will certainly require that you and your spouse not compare yourselves — in particular, your possessions and your lifestyle — to others around you, especially your friends, neighbors and coworkers. 

Make Career Contingency Plans

Have you ever thought about what you would do if your job and career suddenly came to an end? The time to make career contingency plans is before, not after, your job is suddenly yanked out from under you.

For example, some professionals have been able to turn setbacks into opportunities by following their passion to start a new business after being laid off from their job. Others with marketable skills have started consulting or freelance businesses, drawing on their experiences and industry contacts to essentially create jobs for themselves. Give some thought now to what it might take to redefine yourself professionally and start a brand-new career if necessary.

Start Preparing Now 

Just like the coronavirus pandemic seemingly came out of nowhere, there’s no telling what the next shock to the system might be and when it might occur. So take some time now to plan and prepare for how you’ll deal with this kind of unexpected surprise.

The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.