How to Manage Your Money
Experts discuss the best way to handle your finances during this uncertain time.
At the beginning of 2020, South Jersey’s economy was off to a roaring start. The real estate market was booming, the health care sector was strong and continued to expand, and consumer confidence was high.
“New Jersey’s economy, like the national economy, was doing well,” says John E. McWeeney Jr., president and CEO of The New Jersey Bankers Association. “We were in the midst of the longest economic expansion in U.S. history with record levels of employment, low inflation and steady growth. The real estate markets were strong as were most sectors of the economy.”
That was until COVID-19 hit the U.S. Non-essential businesses all over the country had to close at a moment’s notice, which caused millions of layoffs and the economy basically shut down.
The government stepped in by sending stimulus checks to homeowners and offering Paycheck Protection Program (PPP) loans to qualifying businesses. Suddenly banks were getting numerous calls from clients with questions they didn’t even know all the answers to regarding the PPP loans and other loan packages offered by the state of New Jersey. Not surprisingly, the majority of business owners were alarmed at what the future held for their business and the economy.
“The shuttering of non-essential businesses in March brought about an immediate panic for many large and small business owners throughout our region,” says Rick Dapp, SVP, chief commercial lending officer, Franklin Bank. “This panic required all community banks to make the provision of pertinent customer information and the implementation of assistance resourcing their primary concern.”
The New Jersey Bankers Association’s focus during this time has been on keeping its members informed of government programs such as the PPP loans and the Federal Reserve’s Main Street Lending Program, as well as federal and state guidelines on reopening.
“We’ve also represented our member’s interests with legislators, regulators and the administration. For example, we were involved in developing a 90-day mortgage forbearance program with the New Jersey Department of Banking and Insurance,” McWeeney says.
Besides helping his customers with 90-day loan deferments, assistance with opening FDIC-insured deposit accounts, loan restructuring and general public information services, Dapp has been staying in close contact with customers who own nonessential businesses.
“They are the ones that are taking the biggest hit; they have no revenues coming in,” he says. “They have services that are maybe not considered to be essential, but they are essential to the overall local economy. Look at Target and Kohl’s. Kohl’s [was] closed because [it sells] mostly clothes, yet Target, which does sell clothing items and groceries, is open. You can’t really tell what each individual business is going through because of diversity and what they supply and produce.”
“COVID-19 has changed the financial landscape in the facet of how you do business,” says Nick Pantle, vice president, financial planning services, Masso Torrence Wealth Management. “Being restricted was a huge change for most businesses. There was never an anticipation of zero cash flow, which made people rethink emergency savings. From the state perspective, it’s going to be determined. New Jersey has its own issues in the municipality space with funding, as a whole the state was not well positioned before this. Spending has gone up drastically and revenue has gone down. There’s no tolls and not many people are driving.”
Investments
Between the economy partially reopening in our area and things slowly starting to return to a sense of normalcy, combined with a volatile stock market, a big question is, is now the time to invest? Stan Molotsky, president and CEO of SHM Financial Group, says you should ask yourself the following questions before making any kind of investment decisions.
“What is your economic status? What is your cash flow? Can you weather not having income for four to six months and have an investment portfolio redirected?” he says.
“It’s all going to come down to the time horizon,” says Pantle. “How long do you have and what the funds are supposed to be used for. For someone young and looking at retirement, you can invest and look toward it and continue to add to it. Some in retirement who don’t have anything invested and are looking to get back into it, it’s something to be extremely careful and cautious about.”
Mark Fineli, founder of Family Wealth NJ, says the uncertainty of this time and the somewhat explosive stock market shows the importance of talking to someone about your money.
“Now that we had the first real market volatility we have seen in a long time, it showcases the value of using a financial advisor,” he says. “With all of the government intervention in the markets early on in the crisis, it was clear this was an investment opportunity. Now that the markets have come up we have to reevaluate risk again and see where things go from here.”
“The hard thing is when you value certain companies, you usually look at earnings and how those earnings come into play which is a big question mark. We’re going to see that for the last quarter,” Pantle says. “We have rebounded a significant amount though. Led by a couple main areas, the rest of the areas moving up are stimulus-based. The government is pumping stimulus into the economy and having a large effect on the market, giving people a comfort level of thinking things will not go out of business or default.”
The Remainder of 2020
Experts understandably can’t give a clear-cut answer to what the rest of the year will look like. Add a presidential election in a few months to the mix and talk of a potential second wave of the coronavirus, it can cause even more things to go haywire, but Molotksy says these situations also present opportunities.
“All of these uncertainties are what we in turn are confronted with. That presents tremendous opportunity for someone who is willing to take advantage of different things that are available that may not necessarily be available if you have consistency,” he says. “In any market cycle there are always situations you can take advantage of. No matter how bad or good things are, there are situations you can utilize to your advantage.”
Pantle sees health care and technology as critical components to the economy improving the rest of the year.
“Changes in health care are going to be how health care precedes. Telemedicine is here to stay and some of the changes will continue,” Pantle says. “From an efficiency standpoint, you don’t have to drive to your doctor and you can just check in five minutes before your meeting. I think the efficiency of South Jersey will improve. A lot of businesses will adopt more technology and they should benefit. Technology as a whole will do well.”
As we enter the second half of 2020 with many uncertainties, optimism is certainly there for consumers who are desperate to return to normalcy and support local businesses, and South Jersey business owners have proved to be resilient. Experts say the best thing for everyone to do is use caution.
“I think optimism is always there,” Pantle says. “People want to work, especially business owners. They want to do good in communities and provide for their families. This is a short-term thing we’re looking at. Well see what happens with the vaccine. Ultimately people are very resilient.”
“Follow the COVID statistical numbers in your associated market area,” Dapp says. “I believe the current reopening plan is very important to recovery. Those areas which retain lower COVID numbers should proceed ahead because the alternative of further shut down cannot be sustained by most small business owners. The potential resulting loss of these businesses due to continued shut down will undermine our local and national economies. We must take advantage of every opportunity for reopening on a cautious and attentive basis.”
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Published (and copyrighted) in South Jersey Biz, Volume 10, Issue 6 (June 2020).
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Click here to subscribe to the free digital editions of South Jersey Biz.
To read the digital edition of South Jersey Biz, click here.
Published (and copyrighted) in South Jersey Biz, Volume 10, Issue 6 (June 2020).
For more info on South Jersey Biz, click here.
To subscribe to South Jersey Biz, click here.
To advertise in South Jersey Biz, click here.
Author: Julie Shannon
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