2020 has thrown most people – and their finances – for a loop. This year that has really emphasized why we put financial safeguards in place, and what can happen if we don’t.
But the year’s not over yet. There is still time to finish out 2020 strong, prepared for whatever next year has in store.
Here are five financial skills to brush up on right now:
Financial Skills for 2020: Saving like a pro
According to this GoBankingRates 2019 survey, about 70% of Americans have less than $1,000 in savings. And about 45% have nothing saved at all.
That scary reality really hit home for most Americans when lockdowns to contain the coronavirus began in March. That’s why we have emergency funds in place – because eventually, something unpredictable (and expensive) will happen.
[Read: Your Emergency Fund Should Be Boring]
Managing Risk
It’s no secret that the best investment strategy is slow and steady. Active investing, or trying to time the markets, often results in knee-jerk reactions that don’t pay off in the long run.
That’s why it’s best to hold steady when markets are done. A watch-and-wait approach can feel very uncomfortable and risky, but it’s actually a smart strategy during a recession.
Lean into the downturn – Keep your automatic investments going even when the markets are unpredictable, or the news sounds like you should pull your money out.
Nothing lasts forever, and as history has proven, markets rebound over time.
Adaptability
Odds are your year has looked very different than you thought it would in January. Major disruptions to your plan can be extremely frustrating, but it’s also a good opportunity to practice pivoting.
What goals will you focus on now? How can you still move the needle forward, even if it’s only a little bit? Learning how to adapt to life’s curveballs will help you weather financial storms.
Investing for the future
2020 has been an especially difficult year because no one has a really good idea of what the road ahead looks like. You’ve heard the phrase “unprecedented times” a thousand times now, but it’s true.
These “now what?” situations happen many times over the course of a lifetime. Regardless of what tomorrow looks like, invest in your future. Figure out what you can control. Save for what you know you’ll need. You don’t have to throw out all your plans because we’re in a pandemic.
Eventually normalcy will return, so keep planning, investing and saving.
Saying No
Many people are truly learning the difference between needs and wants this year.
Maybe in 2019 you thought you absolutely had to go to your cousin’s destination wedding that you couldn’t really afford. Or you needed a newer car. Or a bigger house.
Trials can teach us how to simplify, pare down and save our energy and money for what matters most. Mastering the art of saying no so you can say yes to better things is a cornerstone of financial success.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP® works with busy professionals to help them organize their financial life and make progress on their goals. For more information on the services offered, contact Katie today.