We made it to 2021. There were times when that didn't seem possible, but we did it. The arrival of COVID-19 and the utter upheaval of our daily lives that came with it put us all to the test. As we enter this new year there is potential for light at the end of this crazy tunnel. Most of us have gained new perspectives on many things, including our finances. Here are some of the lessons we learned in 2020 about managing our money and our spending habits and being prepared for any type of change.
If nothing else, 2020 has taught us the art of remaining flexible in all aspects of our lives. Staying flexible (in all ways) was the name of the game this year, especially when it came down to managing money. This includes your budget and any financial goals you may have put in place for yourself. We saw first hand how saving for long-term financial goals and budgets can change from month to month. We had to adjust frequently to stay on top of expenses learn to go with the flow and stay flexible with our budgets.
Know where every single dollar is going
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.
Make way for the unexpected to your income
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.
Invest in yourself first
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.
Most of us probably never thought a global pandemic would prompt the use of our rainy-day funds. Short-term funds can come in handy a number of ways to cover unexpected expenses even if they’re not a true “emergency.” For instance; making donations to causes, stocking up on medical and household essentials that would have normally ballooned the grocery budget, and making a few upgrades to the home office to improve daily productivity while we’re working from home.
No, these aren’t true emergencies. But having a short-term stash that’s set aside for a particular purpose gives some financial flexibility during this strange time. And, saving for different time horizons and various goals with the right types of accounts can be an important part of our financial strategy in any circumstance.
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, Flagship Bank and other community banks across the nation helped our communities by facilitating government lending programs that offered some financial assistance for those who were affected, specifically small businesses and their employees. 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.
Flagship Bank is here for communities for the second round of PPP loans for our small business community. Contact us with any questions regarding this process. Information is also available at the SBA website. We are here for you in 2021 Minnesota. We can do this together.