Clean your financial closet as you shelter in place

See tips to take action now to better organize and plan your financial life.

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Key takeaways

  • Look for ways to boost your cash on hand, so you can get through this period without running up debt or tapping into your retirement savings.
  • Stick to your long-term investment mix to have enough growth potential to achieve your goals.
  • Good credit can help you qualify for lower interest rates to help finance things like cars, homes, and other necessities. Know your credit score.

If you're sheltering in place these days, you probably have a little extra time on your hands. Maybe you’ve cleaned out that junk drawer or reorganized your clothes closet.

What about your financial closet? To help you take better control of your financial situation and personal economy, here are some tips to help you get better organized, feel empowered, and take control of your financial future.

Review your spending and savings

Concerned about the recent market downturn or staying employed? If so, it's time to look for ways to boost your cash on hand, so you can get through this period without running up debt or tapping into your retirement savings. Read Viewpoints on Fidelity.com: 7 cash flow tips for tough times

Also, see if you are saving enough for retirement. Fidelity's rule of thumb: Save 10x your income by age 67. Read Viewpoints on Fidelity.com: How much do I need to retire?

Revisit your investing strategies

Can you see beyond short-term hiccups in the market? Remember, it's important to stick with your long-term investment mix and to have enough growth potential to achieve your goals. If you can't tolerate the ups and downs of your portfolio, consider a less volatile mix of investments. Read Viewpoints on Fidelity.com: Seeking shelter in volatile markets

When was the last time that your portfolio had a regular checkup? If you're not sure about how recent market activities have changed your mix of stocks, bonds, and cash, check your asset allocation in Fidelity.com's Planning & Guidance Center. Or connect with a financial professional to see if you have a diversified mix of stocks, bonds, mutual funds, ETFs, cash, and other investments that are aligned with your overall investment and retirement goals.

Time to rebalance? Even if you have an investment plan in place, it's a good time to review it. A 60/40 stock/bond portfolio could be off your target allocation by 5% to 10% due to the recent market drop. If your asset mix has shifted significantly from your target, consider rebalancing by selling stocks for bonds or making contributions to gradually get back to your target asset allocation.

Not comfortable doing that on your own? Consider meeting with a financial professional who can help you rebalance. Don't have a financial plan and target asset mix? Now's a good time to get one. And there are lots of options ranging from a robo advisor to a full service advice relationship.

Get tax-smart

Looking for tax-free growth potential and tax-free withdrawals in retirement? Then consider a Roth IRA2 or a Roth IRA conversion. Not everyone can contribute to a Roth IRA because there is an income limit. But it's still possible to have a Roth IRA—by converting money in a traditional IRA or other retirement savings account.

Did recent market moves create tax planning opportunities for you? Consider the potential of tax-loss harvesting to help lower capital gains taxes. Tax-loss harvesting allows you to sell investments that are down, replace them with reasonably similar investments, and then offset any realized investment gains and a small portion of ordinary income with those losses. The end result is that less of your money goes to taxes and more stays invested and working for you. The rules can be complex. If you have a financial advisor, they may already be doing your tax-loss harvesting. If you're doing it yourself, it's always a good idea to consult a tax professional.

Lastly, another tax-savvy savings option to consider: maximizing the use of health savings accounts, if available.

Safeguard your cash

Worried about your cash? Since the Federal Deposit Insurance Corporation (FDIC) was created in 1933, no bank account holder has lost any amount of insured cash. The insurance covers losses of up to $250,000 per person, per bank, per account ownership category. Fidelity's cash management account sweeps balances into accounts at up to 5 partner banks, aggregating up to $1,250,000 of FDIC protection.3

Get organized

Are your financial documents stored safely? Make sure the people you care about know where to find relevant documents and information. Consider using a secure virtual safe like FidSafe® to store copies of important documents and other information, such as passwords, financial statements, and wills. (You can also provide access to your account for your financial advisor.)

Too many accounts? Concerned about the yearly hassle of keeping track of money spread over too many accounts (especially when it's time to do your taxes)? Then consider rolling over an old 401(k) or consolidating other accounts to provide one simple view of your financial life.

Check insurance coverage

Do you have the proper insurance coverage to protect your family? In addition to reviewing your homeowners/renters and auto policies, consider adding affordable personal liability umbrella coverage which protects against the potential financial fallout of certain types of unforeseen events that lead to property damage or injury, for which the policyholder is held responsible.

Family opportunities

Want to introduce the next generation to the world of investing? Then consider opening a Roth IRA which can get your kids started saving early with opportunity for tax-free growth. With a Roth IRA for Kids, an adult maintains control of the account until the child reaches a certain required age in which control must be transferred to the adult child.

Need a family togetherness activity? Perhaps you have a Fidelity Charitable® Giving Account. Get the family together and decide on how you can help COVID-19 relief efforts. Thousands of charities need assistance and you can make grant recommendations as a family that can have a real impact.

Maximize company benefits

Remember the office—the one that you used to commute to? Well the HR team there is still working away. But are you making the most of your employee benefits?

  • Find out if your company offers tuition reimbursement, student loan relief, disability insurance, FSAs for dependent care, vision or dental coverage, or even pet insurance.
  • Take advantage of the benefits that make sense for you, especially the ones that do not require a financial outlay on your part.
  • Some employers help workers transition into retirement and offer benefits such as financial coaching, and the ability to move to part-time work or a flexible schedule.
  • Another benefit available to older workers is the ability to make catch-up contributions to workplace savings plans or IRAs. For 2020, the IRS allows workers over age 50 to add an extra $6,500 to their workplace plan, like a 401(k), and an extra $1,000 to their IRA contributions.

Credit cards, mortgages, and student loans

How's your credit? Good credit can help you qualify for lower interest rates to help finance things like cars, homes, and other necessities. It can also help you get lower car insurance premiums. To start, know your credit score: annualcreditreport.com offers a free review every year. Check with your credit card company; they may also provide free access to your FICO score. Here are some credit card tips to consider.

Is it time to refinance your home loan? Although mortgage rates have varied widely recently, understanding how mortgages work, your budget, and time frame can help you pick a loan that fits your situation—and can potentially save you thousands of dollars over many years.

Need help with student loans? The CARES Act suspends payments on federal student loans for 6 months and waives any interest on the loans for 6 months through the end of September 2020. See tips for parents and students to understanding, managing, and paying off student loans.

Estate planning and other important paperwork

If you do not have complex planning needs, a basic estate plan can be completed online in approximately 1 to 3 hours and may cost less than $1,000 in legal fees. Consider using the Fidelity Estate Planner®, a free online tool for Fidelity customers that you can use to collect and organize information that you can then share with an attorney for your estate plan. Through the Fidelity Estate Planner's "Find an Attorney" service, you can connect to professional legal resources including LegalZoomR that you'll need to create your estate plan. These are good places to start while estate planning attorneys navigate the transition to digital document creation and execution.

Be sure to obtain other documents that can help round out your estate plan: an advance health care directive, a power of attorney for finances, and a health care proxy.

Review, and possibly update your beneficiaries on your financial accounts. It's easy to do and only takes a few minutes online. Working with a financial professional, think about changes you may wish to make as a result of the SECURE Act.

Putting it all together

If you need help in getting and staying organized financially, it may be a good time to consider working with a financial advisor or visiting Fidelity Planning & Guidance Center.

Next steps to consider



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