Budgeting and Money during COVID-19 with FMD Partner Daniell R. Patterson
FMD Partner Daniell Patterson recently had the opportunity share in a discussion with Randall Denha of Denha & Associates, PLLC and Jonathan Dwoskin of The JONDwoskin Experience. In this segment, Patterson provides insight and advice for getting through the current market and uncertainty of the Coronavirus pandemic era.
Below are some key takeaways from the discussion.
How should the average American be budgeting during this crisis especially if they are living paycheck-to-paycheck, now and for the next six months?
COVID-19 has caused everyone to re-evaluate fixed costs and overhead structure, personally and professionally.
SLOW DOWN. Clients should take things slow and not make quick decisions just because the crisis is happening fast; stick to your plan.
Each individual and business should do their best to conserve cash and eliminate non-essential expenses.
Take time to put together a simple monthly budget to better understand where your money is going. Look at your recurring charges such as subscription services and consider pausing them. These discretionary costs will often be a quiet drain on your accounts.
Talk to your creditors about deferring payment. It is important to advocate for yourselves and most creditors are being very receptive right now. SBA loans will give a 6-month forbearance automatically, where they are making your loan payment for you, providing some quick relief.
Reframe your mindset. Asking for help or relief from creditors shouldn’t be shameful. This isn’t a reflection on you as an individual, this is the situation that COVID-19 has created.
Many people have fear about money and a crisis like this spurs that fear and keeps people from an abundant mindset. In a market like this, how do you advise clients to grow their relationship with money?
It’s important to realize that every situation is unique, and so everyone will react differently. Some people may feel that this is a time to be aggressive and take advantage of opportunities, while others will slow down and re-evaluate the situation.
We all want to be able to see a horizon at the end of all of this. It is challenging to live with the uncertainty of not knowing what will happen or how long this situation will last.
The Importance of a CPA
It is important to have trusted mentors in your life. CPAs often find themselves as the quarterback in their client relationships. A large part of the value a CPA provides to their clients comes from the network of qualified and trusted individuals that they bring to the relationship as well as the real-world experience of working with clients.
CPAs are able to help clients understand the nuances of this time such as how to complete the PPP loan application and request for forgiveness.
CPAs help you do the work up front so that your business can be as profitable and successful as possible. This helps produce a strong financial statement at the end of the year.
By examining your financial statements, CPAs are able to help you retain as much as you can through saving money on taxes, and structuring your business properly for the highest ROI. Often it’s not necessarily how much money you make, it’s how much you retain and invest in the future.
