Fortifying Your Finances for 2021 and Beyond
Wednesday, December 9, 2020, 6:00 AM | Leave Comment
A new year is typically the time we let go of the past and undertake new beginnings.
But with the pandemic still looming over the planet, it looks like 2021 won’t be a typical year for making a clean start.
Still, your personal finances won’t become any less important as the calendar changes — with so many things in flux, they may even be more so.
Making sense of 2020 has been difficult, even for financial experts. The stock market is up, but so are jobless claims, especially in the service sector, which includes a wide range of endpoint jobs that serve customers — think restaurants, retail sales, teaching, etc. Fresh thinking may be in order to stay relevant and solvent.
How much will new vaccines affect the economy? Right now, it’s impossible to say.
A new administration, with different policies, may also have an impact. Regardless of these factors, though, it’s safe to say that it’s more important now than ever to nail down our personal money situations.
Here are a few financial preparations to focus on as we proceed through yet more uncertainty (and potentially a light at the end of the tunnel) in 2021.
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Focusing on personal finance
If you don’t yet have a personal budget, what are you waiting for? A budget is the plan that drives all your other financial behaviors. Of course, if you’ve been laid off, furloughed, or are facing other uncertainty, you may be wondering what the point is. But you still need to prepare; you just need to stay nimble while devising your plan.
First, the basics: Map out your income and expenses. Pay your bills and, if you’ve got excess debt, try to pay more than the minimum each month. Then set something aside in savings. Set short-term and long-term goals, and consult experts, websites, or apps for help figuring out the best way to achieve them.
While you’re at it, check your credit report and see what you need to do to improve it. Current credit problems could result in loan rejections when times improve and you’re looking to make bigger moves. No matter what comes your way, having all your ducks in a row financially makes other preparations much easier to enact.
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Changing employment
Your job has likely been changing in one way or another. You may have been transitioned to remote work, your hours may have been cut, or you may have been given new responsibilities amid downsizing.
Changes are being made not just to staffing but also to benefits. As health insurance costs continue to rise at an alarming rate, more businesses are cutting back on what they offer; others are moving to part-time and contract workers — who don’t get benefits at all. Worse still, part-time workers earn 29.3% less per hour than full-time employees.
Ask your human resources manager what changes are coming so you can be prepared. If you’re working without benefits, research your retirement savings and insurance options. Figure out how much health, auto, and homeowners insurance you need, and avoid paying twice for overlapping coverage.
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Branching out on the job
If you’re traditionally employed, check into options for cross-training, new assignments, and professional growth. The wider a range of skills you have, the more employable you’ll be. See what training programs are available through your employer or online.
If you’re freelancing or in business for yourself, see whether you can start a side hustle. With the economy going digital at an accelerated rate, thanks to the pandemic, people working in many sectors of the economy have found online ways to meet demand for new goods or services.
To further repurpose your skills for the new economy, consider learning about SEO, online marketing, and distribution via sites such as Amazon and eBay. Then spread the word about your new capabilities on social media. Check out networking sites such as LinkedIn and Nextdoor to help you take the next step, and put your résumé online at Indeed or Monster.
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Staying secure in the pocket
Uncertainty has been the watchword for 2020, and the last thing you need is another big expense to throw your life into turmoil.
The best way to guard against unexpected expenditures is to keep things in good running order. Keep your chimney clean and your roof in good repair. Have your car serviced with regular oil changes and tuneups. Schedule regular checkups with your doctor and dentist.
On top of it all, protect yourself from unexpected home repair costs with a home warranty. It can complement homeowners’ insurance by covering the cost of major repairs to home systems and appliances. So if your furnace breaks down, for example, you won’t be stuck in a freezing house trying to work, study, teach, live, and figure out how to pay for the repairs.
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Avenues for aid
Especially if you’ve suffered pandemic-related losses of income, it might seem like there’s nowhere to turn — but that’s not true. Many avenues for aid are available to you. Investigate them to find out which ones you’re eligible for.
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Creditors may be willing to grant you some flexibility with payments by delaying or spreading them out. Check with your landlord, as well.
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Ask your employer about programs available through your workplace, such as discounted insurance rates or flexible spending accounts.
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Pursue government programs such as tax relief, unemployment, low-income home energy assistance, public housing programs, and student loan relief. Several new financial assistance options have been offered by the federal government since the beginning of the pandemic; look into those, too.
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Future focus
It’s easy to get so caught up in just surviving the present chaos that you forget about the future. But don’t fall into that trap! It’s still important to pay down any debt so you can start (or augment) putting away money for retirement.
Another smart and relatively easy step is to get your personal documents in order (including your will, power of attorney, health care directives, etc.) so your family will be protected, no matter what happens in the future.
When all is said and done, you have plenty of tools you can use to weather the current economic storm. Use the new year as an excuse to take some time and figure out how to use them. And remember this: Better times are ahead. When they arrive, you’ll be there to grab them by the horns.
Throw us a like at Facebook.com/doable.financeBy Jessica Larson, SolopreneurJournal.com
