"2020 has been a year of major change for all of us. No one was spared from the anxiety of the COVID-19 pandemic, the stress of racial injustice, a historic (and eventful) election season, and the impact it all had on our personal, professional, and especially our financial lives.
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If this crazy year has taught us anything, it’s that nothing is guaranteed, including financial stability. It can be difficult to look at the bright side of 2020 and what it’s taught us, but there are a few lessons to be learned about money management in the midst of a time that’s particularly stressful. Here are a few lessons this uncertain year has taught me about managing my money and preparing for any type of change.
1. Be flexible with your budget and financial goals
Staying flexible (in all ways) was the name of the game this year, especially when it came down to managing money. My budget and financial goals had never been in such flux until this year, where major impacts on my income affected my spending and the overall expectations I set for myself.
This year has taught me the art of remaining flexible when it came to how my budget changed from month to month and saving for long-term financial goals. No longer was I able to stick to a set budget each month; I had to adjust it frequently and keep an eye on my spending to make sure I’m meeting my goals and covering all of my essentials. Stay on top of your expenses and be nimble with how you budget. There’s always going to be an ebb and flow to your finances; learn to go with the flow and stay flexible with your budget.
2. Know where every single dollar is going
One of the most unnerving feelings is checking your bank account one day and not knowing where your hard-earned money went. One day it was there, and the next? You’re scrambling trying to keep your account out of overdraft before all of your bills are paid.
Tracking every dollar that goes in and out of your bank account is an important money management tool that helps you evaluate your spending and prepares you to save more. It also keeps you from panicking every time you spend. Keep a close eye on your expenses and leisurely spending by using a budgeting tool to track every dollar you spend. It’s easy to take your eyes off of your bank account and budget (especially during the holiday season), so be mindful of your spending and manage your money wisely.
3. Make way for the unexpected to your income
For years, my income was pretty stable: I worked a typical full-time job with a few side gigs here and there for supplemental income and received a steady paycheck every two weeks like clockwork. This year though flipped my financial security on its head, as I experienced changes to my income (and subsequently my budget) like everyone else did due to the pandemic.
If the unexpected happened to your income this year, you now know the importance of making way for unexpected changes to your income. Nothing is guaranteed, especially your paycheck, so prepare in advance for any shifts to your income. This is where saving more, spending less, and possibly looking for another stream of income comes into play. If you can, try not to let one or two paychecks be the difference between your financial stability and whether you can afford to live. Secure yourself financially by always being prepared for any impact to your income.
4. Your savings isn’t untouchable
Where I once held onto my savings out of pride and to watch it continue to grow, this year, my savings has taken quite a few hits to supplement the lack of income I experienced due to the personal effects of the COVID-19 pandemic. If you’re a money hoarder like I am, your personal savings is your crown jewel, but don’t be afraid to use it when you need it.
Financial emergencies can–and will–happen, and being prepared with a healthy emergency savings is what savings is there for. If you’re in need of a few extra dollars to cover your expenses, tap into your savings to help you along. It might go against every piece of financial advice you’ve received before this year shifted everyone’s financial security, but it’s important to use your safety net when you need it.
5. There are always ways to cut back and save more
There is nothing like a good savings to keep a few extra dollars in your pocket! This year has made me tap into my inner couponer, especially after facing a furlough period on my job that challenged me to reevaluate my budget significantly.
This year, I stashed away more money by cutting back on unnecessary expenses and using any and all types of savings techniques, from couponing to splitting expenses with family and friends, to maximize and stretch my income. You can always find ways to save more money for emergencies and long-term goals by taking a good, hard look at your budget, cutting back on spending where you can, and using all savings at your disposal to spend less on your wants.
6. Don’t be afraid to accept assistance
This year, millions of families were affected by the COVID-19 pandemic financially. Whether you were laid off, furloughed, or your business suffered significant losses financially, everyone felt the strain to their wallets this year.
Thankfully, many states and programs offered some financial assistance for those who struggled this year to make ends meet. Accepting financial assistance and support is something many of us had to consider and take this year–and there is no shame in that. This year has affected everyone from all employment statuses and economic backgrounds; don’t let your pride keep you from accepting financial assistance if you need help.
7. Invest in yourself first
One lesson from my grandmother that I’ll never forget is to always pay yourself first; everything else comes second. You are your biggest investment. Don’t skimp on your financial security by making sure to save for a rainy day and for any short and long-term personal goals. Your savings, financial investments and portfolio, and overall net worth and credit health should all take precedence when thinking about where your money should go.
Investing in yourself also means taking care of yourself physically and mentally. Make sure to make room financially for self-care, whether it’s budgeting for a quick mani and pedi once every few weeks or paying out-of-pocket for therapy or other mental health services. You deserve to invest in your well-being; make it a priority to set aside some of your hard-earned money to give back to yourself.