We were acutely conscious of the health concerns every time we leftour houses during the coronavirus outbreak. When it comes to money, though,we've always taken calculated risks.
Many people have had to rethink how they take risks, react inunpredictable situations, and defend themselves and their loved ones in theprevious year. The pandemic's wide-ranging consequences shone a spotlight on individual and family finances, as those with well-balanced portfolios, good saving habits, and high-demand occupations fared best.
As the country begins to recover, this period of transition allowsfamilies to reflect on how their financial plans fared or failed when put tothe test by an economic downturn.
Examine Your Financial Plan And Assess Your Risks
To prepare for future economic ups and downs, first learn how yourcurrent financial strategy fared through the previous year's storm. It's timeto make a financial plan for the future for those who don't have one.
"Understanding that things will inevitably go wrong is animportant part of having a strategy. If you don't have any buffers built intoyour strategy, it's not a plan "Brian O'Leary, a wealth counsellor and senior analyst at ALINE Wealth on Long Island, concurs. "Understanding where you are and how you survived this pandemic, as well as reviewing what tools you relied on, is step one."
According to O'Leary, this approach could entail thinking about howyour personal savings fared over the last year and, if your present emergencyfund wasn't enough to cover bills, creating a new target savings rate for the future.
Make A Contingency Plan
The unexpected nature of the pandemic's arrival in 2020 should serveas a reminder of the significance of preserving. For individuals looking to laya solid foundation, the first step should be to set up an emergency fund.
"It can feel daunting to try to put money away now because ofthe financial difficulties caused by COVID-19, but it will bring peace of mindin the future," Anne Marie Ferdinando, member outreach manager at Navy Federal Credit Union, wrote in an email. She suggests that to begin started, "Create a new savings account for an emergency fund. You won't have to touch anything until it's absolutely essential because it'll be distinct. Setting money away for an emergency fund should be a part of your budget. As you look to plan for the future, even as little as $10 per month could be beneficial."
Organize Your Own Cash Flow
During the pandemic, some customers were saving aggressively, butmaintaining such habits will be critical in preparing for future shocks.
"We're looking forward to getting back out and doing the thingswe haven't been able to do recently: hospitality, dining out, leisureactivities, and travel. But how does this affect your own financial situation as a customer? "Goldman Sachs managing director and co-head of consumer finance Elisabeth Job Kozack asks. "Make budgets for yourself and plan your spending so you don't end up in a situation you've worked hard to avoid over the past year."