Due to a global pandemic, 2020 was a year of great uncertainty and unknowns. 2021 will also face similar challenges as we close in on a year since the U.S. began instituting lockdowns. Responses to the virus, including shelter-in-place orders and other safety protocols and restrictions, have had a significant impact on the economy, leading to the first real economic downturn since the Great Recession of 2008.
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By May of 2020, 14 million Americans filed for unemployment (up from 6.2 million). Today, many small businesses that are still surviving continue to hang in the balance, uncertain if the tide will turn in a positive direction or if they will lose what little they are making. Families have had to shift how they function, too, with more people working at home alongside their learning-at-home children, and renegotiating roles for domestic duties and child care.
Create a Financial Plan
It might seem so obvious it’s simple, but without a financial plan — ideally in writing and shared with your family — you are essentially driving your finances into the future with no guidelines. According to the U.S. News & World Report, people with financial plans are 78% more likely to pay their bills, 68% more likely to have created an emergency fund and 74% more likely to directly put money into savings.
Think About Your Family
If you’re a parent, you’ll undoubtedly be thinking about your kids during all of this. Uncertain times might not be the right moment to open a college fund, for instance, but you could still put a small amount away into savings. Or, perhaps you will want to put more money into their college fund and less into your retirement during these times. Or allocate college money to child care until your finances rebound. No option is wrong or right, only what’s right for you — and knowing that it’s all temporary can help you make these decisions a bit more easily.
Set New Priorities
Your financial situation may have changed during the pandemic — perhaps you were laid off or temporarily furloughed, collecting unemployment or dealing with reduced hours. If your income has changed, your former financial goals may not be realistic right now. It doesn’t mean you have to drop them but rather shift them, according to the blog of Michael Solari, a financial planner. Maybe you put less into retirement and more into your emergency fund. Make a list of what your immediate goals are now, be flexible in adapting to them, and know that in the future, especially if your income increases, you can return to your original goals and even set new ones.
Improve Your Money Management Skills
Uncertain times are an excellent opportunity to learn or refresh basic money management skills, so you’ll be prepared and better armed for future changes. From setting a budget to paying off debt, to learning how to invest, there are a ton of money skills you can pick up off the internet in your downtime that will support you into the future.
Consider Alternate Income
A global pandemic and an economic downturn may not seem like ideal times to look for new income streams, but you might be surprised. If you work in an industry that allows you to work at home, perhaps there are contract or freelance positions you could add to bring in new work. Maybe, if it is safe for you, you could drive for a ride-sharing service. According to money expert Dave Ramsey, many industries are actually hiring, even if only temporarily, right now, from grocery stores to tech businesses.
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No matter what you do, try to remember that everything is temporary, even financial uncertainty. With vaccines rolling out across the United States, hope is in sight, even if we don’t know exactly when things will change for the better.
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Last updated: May 10, 2021