This past year's lessons we can apply to 2022
Are you all ready to start a new? The year 2020 subjected us to shutdowns, death, disease, closed businesses, job loss, and depression. Families who developed concrete financial plans learned their plans were not recession-proof, savings dwindled, and many are left without unemployment income to this day. While 2020 was a miserable year for most, last year's financial lessons offer a fresh look into resolutions for 2021, all doable and based on expert studies during the pandemic.
Start with an established emergency fund.
We learned having just over $2,500 tucked away can mean the difference between surviving through a crisis or falling off a cliff. This is based on a University of Colorado research. The right way of getting to that level is by moving a regular amount of money from your checking to your savings monthly. Do so even if you have credit card debt, and keep an additional reserve at home if you can; cash tips for meal delivery drivers will be most appreciated.
Get your affairs in order.
Hundreds of thousands of Americans felt a sense of normalcy, then one day, it all changed; they were cut off from family, loved ones ended up in the hospital or nursing home, too many died. Wills were not in place, advance directives did not exist, and families were left to deal with bill collectors and in-fighting over the deceased personal property, which is now managed by the State they resided in.
If you are without a plan and have no one who can help you put in place legally binding documents that layout your explicit health care and after-death desires, try LegalShield; an attorney group membership that provides value-based services for a nominal monthly fee.
Make some permanent cuts.
In regular times, spending large portions of your yearly income on restaurants, concerts, and shows seems like a great idea. Like most people, that all ended in March, and by now, it's not surprising how little you miss it all and how much you are saving. Mall shutdowns helped to curve your impulse purchases, which amounts to even more savings. To reexamine your spending habits, think about giving up 2021 spending by examining your 2020 savings.
Invest while minimizing ups and downs exposure.
Large-company stocks fell 34 percent between mid-February and mid-March. From there, they rose 55 percent through Oct.23. That shows you can't risk having everything in stocks if you want your investments to fund your retirement. Keep enough cash in vehicles that won't suffer losses due to the stock market, such as your bank account or a money market account within your IRA or 401(k). Nor can you risk having none of your money in stocks. If you've been too nervous about investing, there are ways to grow money using the stock market without losing your money in stocks.
Practice gratefulness.
For many of us, the words "you don't realize what you have until it's gone" will forever be a lingering memory from 2020. I hope that in 2021 we can all be more appreciative of family, nature, fresh air, and for most of us, access to clean water. For one, I feel fortunate to have daily meals, manageable blood pressure, and a place to call my home. May you and your loved ones have that as well in 2021. Let's get it started!
Gregory Dunlap is a Licensed Independent Insurance Broker. You can reach Gregory by calling (443) 914-3366 or emailing him at greg@dunlapfinancialsvc.com or by visiting www.dunlapfinancialsvc.com
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL OR TAX ADVICE.
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