In May, the American Institute of CPAs asked members of its Financial Literacy Commission to recommend steps to help Americans prepare their finances for a potential sharp economic downturn.
Some 600 CPAs responded to this latest iteration of the AICPA personal financial planning trends survey.
“CPA financial planners work with their clients to develop plans that fit their personal situation and manage them through good and bad economies,” Dave Stolz, chairman of the AICPA personal financial specialist credential committee, said in a statement.
And the current economy is definitely bad, as Americans endure the economic shock brought on by the coronavirus pandemic. This crisis follows on the dot-com bubble two decades ago and the subprime mortgage crisis that led to the 2008–2009 recession.
“As many Americans experience layoffs and economic uncertainty due to the COVID-19 pandemic, it’s an unfortunate reminder of the importance of planning for a downturn even when the economy is doing well,” Stolz said.
Following are the top five actionable tips to help individuals strengthen their financial situations by CPAs who participated in the survey and comments by PFP members.
1. Establish and build an emergency fund (recommended by 84% of CPAs surveyed)
“You will be surprised at how fast small investments can add up when consistently made over the long term,” David Almonte said. “Allocating just a few dollars a day toward building up your emergency fund will add to significant amounts in just a few months. A great first step is to simply set a goal amount. Know what you are working towards and check in regularly.”