The COVID-19 pandemic will undoubtedly go down as one of the craziest experiences of most people’s lifetimes. Between the fear, uncertainty, politics, and new precautions (such as wearing face masks everywhere you go), it’s definitely been a disruption that has touched everyone you know.
Like all life experiences, a situation is what you make of it. And if there’s anything we can take away from the pandemic, it’s that we can be more resilient than we think. With that in mind, here are four major lessons we can all learn from 2020.
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1. You Absolutely Need an Emergency Fund
I’ll admit – I was probably like you when it came to emergency funds. The idea of stashing away 3 to 6 months worth of living expenses in a cash account just seemed completely unnecessary. Wouldn’t a better use of that money be to:
- Invest it?
- Pay off my debts?
- Put it towards a business idea?
Then COVID hit and something happened that hasn’t occurred in the U.S. since the time of the Great Depression. Unemployment swelled from one of its lowest levels in years (3.8% in February) to an unprecedented 13.0% by May. Even though things have gradually tapered off since then, millions of people are still out of work, displaced, or simply without any means to support their families.
The pandemic has taught us that there are no “safe” jobs and that every industry can be impacted by disaster. Now I’m starting to think that not only do I absolutely need an emergency fund but that it should have as much as 12 months worth of living expenses covered.
What you can do: If you don’t already have an emergency fund, make it a priority to start one. By making some small spending sacrifices that will allow you to set aside $25, $50, or even $100 per month, you’ll sleep better knowing that you’re financially prepared for whatever is next to come.
2. Multiple Sources of Income May be the Key to Your Survival
Many people have been using side hustles for years as a fun way to earn some extra spending cash. But since the pandemic, it’s been estimated that more than 27 percent of Americans now rely on the money they earn from a side hustle to cover their regular monthly bills and expenses.
It was well known even before COVID that relying on a single paycheck (such as the one you earn from your day job) would put you in jeopardy if something were to happen. But now it’s clear that the more you work towards diversifying your sources of income, the less at risk you’ll be.
What you can do: Think about what talents or skills you have that could be marketable. Are you:
- Are you good at writing, editing, drawing, tutoring, building, coaching, etc.? If so, then look for gigs on places like Upwork or Fiverr.
- Do you like to shop, drive, or pick-up food for other people? If so, then sign up to work for services like Shipt, Instacart, or Uber.
- Are you really good at doing random tasks that other people simply don’t want to do? If so, then pick up jobs from a platform like Taskrabbit or Thumbtack.
Working for any of these services is completely voluntary, so you can set your hours and, in many cases, your own rates. But once you start, trust me – the sense of empowerment that you’ll feel from being able to evolve beyond just your regular paycheck will be invigorating.
3. Be Ready to Invest Like a Pro
The start of 2020 was a wild ride for investors. Having just come off a 31.5% gain from the previous year, the markets were continuing to look promising. Then, COVID cases in the U.S. started to appear, and it seemed all hell broke loose …
Almost immediately, investors were spooked and a great sell-off began. From its highest point in February to its lowest point on March 23, the Dow Jones Industrial Average lost 37% of its value – all in just one month!
While it’s always a scary thing to watch markets go into a freefall, it’s important to recognize this could also be a once in a lifetime investment opportunity. As the old saying goes, the goal in investing is to “buy low, sell high”.
Since that turbulent time back in March, the markets have mostly stabilized and the Dow Jones hit a historic mark of 30,000 points near the start of December. That means that if you had invested at that low point on March 23rd, you’d have made a staggering 61% return since then.
What you can do: Once your emergency fund is all set, start thinking about putting aside some additional money that you can use the next time the markets decline. Keep a watchful eye and when everyone around you starts panicking, know that it’s your time to buy! If you are not sure how to start investing, then I suggest reading 3 Simple Ways You Can Start Investing Money.
4. Make Time for What You Love Doing
Work from home …
Government stay at home orders …
2020 was the year that millions of Americans suddenly found themselves spending more time at home than they probably could have ever imagined they would. And while this adjustment may have been rocky at first for a few, there’s one thing to be said for all of it:
You’ll never have this much time ever again.
With no longer having to commute or being able to go out in public like you used to, nearly everyone has more time on their hands than they probably had a year ago.
So, reflect on that for a moment. What did you do to pass the time?
- Learn something new?
- Work on something you feel passionate about?
- Connect with the people you care about?
If you didn’t do any of these things, don’t worry. We may be near the end of 2020, but the situation with the pandemic is not over.
What you can do: Decide what you want to accomplish going into 2021. It might be to learn a new skill, develop a side hustle, or even just to read a book that you’ve been putting off. It doesn’t matter. The point is that you should use the time to do something that you’ll love and will bring value to your life for years to come.
Key Next Actions:
- Write down areas in your life that you want to improve.
- For each area of improvement, write down goals for 2021 that will help you improve.
- For each goal, determine tasks that need to be completed to accomplish the goal.
- Put start and end dates next to each task.
- Begin working on those tasks to start 2021 off strong!
LEARN all that you can, BELIEVE in yourself, and take actions that allow you to GROW!