The COVID-19 pandemic has affected every American to some degree. For a select few the effect has been good, but for most people it has not been. There are many lessons to be learned from this pandemic that has forever changed the way I handle my money. Though you may not share my experience, many of my professional counterparts do. In this post, I will share the lessons I learned in 2020 that can help you on your journey to financial wellness.
Have An Emergency Fund
Wherever you are in your financial journey, you should know the importance of an emergency fund. It is recommended that you have 3-6 months’ worth of monthly expenses saved for emergencies. According to the 2019 GoBanking Rates Survey, 69% of Americans have less than $1,000 in their savings. In January 2021, 10 months into the COVID-19 crisis, 6.3% of Americans were without employment. That may seem small, but that translates to over 10 million people without employment! Many were not prepared for the unprecedented economic fallout caused by the pandemic. Having an adequate emergency fund could mean the difference between having a home and being homeless.
Life Happens, Be Flexible
In 2019, the credit bureau Experian published that consumer debt was almost $14 trillion and the average American owed almost $90k in consumer debt. One of my goals, at the beginning of 2020, was to be debt free by aggressively paying off my student loans. In April 2020, I realized the gravity of the COVID-19 pandemic and decided to stop making large payments. Even though all federally backed student loans were in forbearance, I still chose to pay the minimum payment on them. Instead, I am now saving aggressively just in case I lose my job.
The lesson I learned was to be flexible in my journey. Life happens and when it does, we must react. Events will happen that may slow down your progress or prevent you from achieving your goals in the time frame that you want. Don’t give up. Just adjust your strategy and keep going.
Be Kind To Yourself
Because of the pandemic, I have been strict about not socializing and only going out when necessary for short periods of time. Therefore, I was quite isolated. To compensate for this lack of socialization, I shopped more than I would usually do. I am a minimalist and HATE clutter, yet in 2020, I caught myself buying trinkets for my cat and dresses for myself. I was disappointed in myself.
The lesson here was, it’s ok to fall short in your goals. Everyone stumbles from time to time. The most important thing is to get up, learn, forgive ourselves and move on stronger and wiser than before.
COVID has taught me so much about myself and how to manage my finances in times of crisis. The lessons that I learned last year have left me better prepared for the future.
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