“The end is near…again!” For centuries, doomsday sayers have said it and prophesied the apocalypse. But there’s a tiny catch: Not a one of them has ever been right about any end-of-world prediction…ever. At least as far as I know, that is.
But if you have had any thoughts about an apocalypse happening, 2020 may have had more evidence than any other year you can remember in the past 100 years or so. A worldwide pandemic will do that to you.
But, there is some good news now. A vaccine is here and it appears that the scourge of COVID-19 will not be the cause of the end of time. True, it’s not over yet, but it will be sometime in 2021. Are you ready to resume life as you knew it?
Sci-Fi or What?
Through the dark fringes of the internet and the media, many “end is near” consequences were predicted for 2020 before it began. For example, it was predicted to end in a nuclear war, an asteroid impact, and a new ice age to name but a few of the more popular doomsday prophecies. The pandemic wasn’t really on the radar screen before it began, although there has always been a “what if” mentality from the medical science community when it comes to a sweeping new disease ending life as we know it. Think a bad sci-fi movie and you’ll get that picture or better yet, just read any newspaper you have access to from sometime this past summer.
You Are Being Tested But You Must Move On
The very best time to make a move forward is always now! Even more so because we are ending a time frame (2020) and have an opportunity to begin a fresh new year. Think of it as a reset button on your life. Just like when some electronic gadget fails and freezes, preventing it from working, and you hit the reset button. Life needs the same kind of approach.
The pandemic’s end represents a rare but narrow window of opportunity to reflect, reimagine, and reset your world to create a healthier, more equitable, and more prosperous future for yourself.
Where Do You Begin?
If you could look in a crystal ball, you would have a clear picture of how you should financially prepare for 2021. You can only guess what lies ahead for next year based on experiences this year. 2020 has been tough on most businesses and has caused closings, lay-offs, and disruption to learning, health and social concerns, and all forms of financial stress.
If the current recession extends into the new year longer than we would like, our optimism will begin to stifle. Don’t let your optimism stifle.
Many people have changed their habits during COVID-19 and are adapting to the new normal which is critical to staying healthy. You also need to be financially prepared for anything. That’s why you have to get back down to basics in order to prepare for the upcoming year of 2021.
A New Beginning
1. Rebuild Your Emergency Funds
Save as much as possible in case of future lay-offs or closing at your employer. Your emergency fund should cover a minimum of three to six month’s expenses.
You can take a distribution up to $100,000 from your retirement savings this year through The CARES Act without paying the 10% early distribution fine, but liquidating your shares may result in taxation, a loss of valuation, and having less money during retirement. Only if you have no other way should you ever consider doing that.
2. Fund Your Retirement Savings
At some point soon, you may be heading back to your job, finding a new job, or creating you own new work situation. When you do, make sure you set up contributions to fund your retirement savings.
If you are still working right now, consider increasing your retirement savings contributions. That way, if you do lose your job or are laid off, you have at least made some contributions that will help boost your retirement savings.
If you are able to and have youth on your side and your risk tolerance allows, meet with a financial professional and review making a portfolio of funds, stocks, and/or other investments that can accelerate money growth keeping in mind diversification. Diversification can help avoid severe losses when containing assets from various market segments and insurance products such as annuities.
3. Set Up a Real Monthly Budget
You cannot beat the system of financial gain without a budget. So, even though it’s number three here on this list, it’s like the George Washington of finances and “number one” in your heart!
Often people find themselves running out of money before their next paycheck arrives, living paycheck to paycheck. If this sounds like you, take time to assess your overall monthly spending to find the gaps that are eating up your monthly income. Tracking your expenses will help you find out where all that money is going. Then determine what you can eliminate to ensure you are not financially stressed each month.
Remember that setting aside part of your income for retirement and future needs is as important as any of your needs and wants. Investigate all of the different ways that may help keep you on track each month, many of which I have written about over and over here on the blog!
4. Reduce Your Debt
Carrying credit card balances forward each month and paying only a part of your bill will decrease your ability to save money. Instead of paying interest and monthly credit card payments, put a stop to credit spending as much as possible and begin a “no-spend” period for a week or a month, and use your new-found funds to increase your savings.
2021: Get Ready for a Financial Turnaround
According to a study by WalletHub, Americans began 2020 owing more than $1 trillion in credit card debt after a $76.7 billion net increase during 2019. Consumers quickly changed course, however, posting the biggest first-quarter credit card pay down ever, at $60 billion. This was followed by another record in Q2 when consumers paid down $58 billion more in credit card debt. Although first-quarter paydowns are normal, Q2 2020 marks the first time in more than 30 years that credit card debt has dropped from April through June. Why? The pandemic stopped consumers from spending at will and guess what? Consumers all managed to do it and survive.
As 2020 ends and 2021 begins, preparing for the unknown lies ahead as your biggest challenge and yet also your biggest advantage. It is most definitely in your best interest. As always, the questions of how to financially prepare, save, and protect your finances for your future are waiting for your actions and your answers.
If I have one job here at Super Saving Tips, it’s to educate and cheerlead you to think about every dollar you spend to maximize your chances of success. I know you want to do just that because you are here reading. But here’s the thing: The answers never change and the questions are always right in front of you. I don’t make them up, nor did I invent the solutions.
The end is near for 2020. If you commit to a reset and new start for 2021, then get ready for success. If you don’t do it, ask yourself why you didn’t or couldn’t. You will figure out your answers in a heartbeat and be attempting to reset in 2022 all over again. Don’t do that to yourself and your family. Why would you want to?