Even if you didn’t experience financial instability in 2020, it’s OK if this feels like a lost year. Be kind to yourself. You don’t have to hustle your way through the pandemic.
If you lost some or all of your income, had to delay a big financial step, or had to stop saving for retirement, you’re far from alone. One in three American adults has had to pull money from their savings or retirement accounts to pay their bills this year.
There are a lot of people on the other end of the spectrum, too. The U.S. household savings rate spiked during the pandemic, meaning a lot of us are putting a lot more money in the bank than we usually do due to remote work, cancelled travel, and spending a lot more time at home.
If you didn’t do anything intentional with those savings, that’s OK too. Everyone is struggling to focus right now, whether it’s on the task right in front of us or on our 10-year plans.
Take a step back this winter and re-calibrate. If you’re in a position to use those extra savings to max out your 401(k), make sure you do so by Dec. 31. (For a Roth IRA, you have until April 15, 2021). You could use those savings to take a big step toward one of your goals, like a down payment on a house. But if you’d rather make a donation to a food bank or give gifts to friends and family who are struggling, go for it. If you’re in a position to be generous, now is the time to do so.
Once the holidays pass, set some new goals for 2021 — and then, whatever happened this year, get back up and start working on them.
Where To Turn If You Need Financial Help
Early in the pandemic, we saw federal unemployment assistance, stimulus checks, mortgage forbearance, and tons of other options for financial help. Some of those supports, like eviction moratoriums, have gone away in many places. Many others are expiring this month. Millions of Americans are behind on their rent.
And that’s if you were able to take advantage of that support at all — many people have had to wait months for their unemployment claims to go through, for instance. Getting these claims processed can require hours on the phone, which lots of us don’t have right now, especially if we have caregiving duties.
If you’re worrying about how you’re going to pay your bills in the near-term future, think about what you can negotiate. Ask your credit card company or mortgage lender if it’s possible to extend forbearance while you wait for your claim to come through. Fortunately, the pause on federal student loan payments already has been extended through the end of January.
Keep an eye on the news in the coming weeks and months, too. Congress is working on another stimulus package, which could include unemployment benefits or other forms of relief. And when the presidential transition is complete in January, the Biden administration may extend existing supports or offer new ones.
Remember during this time that you are not alone — in fact, it’s the opposite! A TD Ameritrade survey found in August that three in four people in the 25-29 age range were considering moving back in with their parents. Hundreds of thousands of Americans have visited food banks this fall.
Right now, and always, there’s no shame in asking for help. What matters is that you’re safe, healthy, and supported. You can come back to the rest later.
Nothing Went According To Plan This Year — Which Shows That Having A Plan Is More Important Than Ever
For those of us who’ve been fortunate to shift to remote work during the pandemic — despite the challenges of navigating kids, roommates, pets, and restlessness — there have been many lessons to learn too.
Early in the year, GYP encouraged our clients to stick to their investment strategies and not panic. There’s always some volatility in the markets, but historically, they’ve always gone up over time, even after shocks like the start of the pandemic. As it turns out, the stock market looks like it’s going to end the year at record highs.
Lots of our clients were able to pivot this year. Those who had prioritized building up their savings were able to take advantage of the shift to remote work, seizing the moment to make moves (literal or figurative) that they’ve wanted to make for years.
All in all, what this year has shown us is that, when nothing goes according to plan, having a plan is more important than ever.
For instance, if you’ve already had the chance to sit down and think about your financial goals, you probably have some money set aside for emergencies. You might have started saving for retirement or paying off credit card debt. If you’ve taken those steps, you’ve experienced the freedom of knowing that you can use your credit card when you need to, or that, if you lose your job, you have a few months to find another one.
It might seem counterintuitive at first, but financial planning is all about freedom. Sometimes it’s the freedom to do what you want to — and sometimes, when nothing goes the way you expected, it’s the freedom to do what you need to.
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