What we’ve learned about money in 2020

It’s pretty fair to say that nobody could have anticipated the events of this year to provide financial tips for 2020 that would have all families covered. From a global pandemic to a nationwide lockdown to mass demonstrations supporting anti-racism and social justice, a lot of us are experiencing a tumultuous and life-changing year — and it’s only half over. We’ve learned new terms like “social distancing” and “quarantine pod.” We’ve become experts at working from home and teleconferencing with friends. We’ve (mostly) started wearing masks to protect ourselves and others, whether we’re going to the grocery store or taking a walk in our neighborhood.

Many of us are managing our money differently, especially if we spent the first part of 2020 laid off, furloughed or just anxious about what might happen to our incomes in the future. Now that we’re in mid-summer, can we use what we’ve learned about money in 2020 to help us make better financial decisions? We reached out to three financial experts to learn which money goals people should prioritize, how to navigate the uncertainty of investing, why estate planning is essential, and how their financial advice has changed in this unusual — and unpredictable — year.

Emergency funds are more important than ever

If there’s one financial tip for 2020 that all three of our financial experts agreed on, it’s that emergency funds are essential for financial success. “We’ve all been reminded of the value of maintaining adequate emergency savings,” says Brendan Willmann, a CFP® professional at Granada Wealth Management. Sam Dogen, aka the Financial Samurai, told us that having a six-month emergency fund is “crucial,” especially if you’re worried about job losses or stock market fluctuations.

Emma Leigh Geiser, a personal finance coach who blogs about the intersection of finance and healthcare at Nurse Fern, advises everyone to prioritize saving as much cash as possible, even if it means pressing pause on other big financial goals like debt repayment. “Go back to paying the minimum on debts, put any extra money that would have gone to debt safely away in a savings account, and when things return to normal-ish that money can be transferred to your creditors.” (Geiser isn’t the only person who’s advocating that you pay the minimum on debts, btw — Suze Orman, Rachel Cruze and Shannah Compton Game have all shared a similar sentiment.)

The coronavirus pandemic taught us that we might have to spend an extended period of time living on whatever we happen to have stocked up, whether it’s food, toilet paper or emergency savings. A lot of us are going to put a few extra rolls of TP into our cupboards this summer — and we should put a few extra dollars into our emergency funds as well.

Stock market downturns? Don’t panic

Having a robust emergency fund in place can help you cover the costs of an unexpected job loss, furlough or lockdown, but that isn’t the only reason to set aside six months’ worth of expenses. A solid cash reserve can also keep you from making panic-driven decisions during stock market downturns. “The more cash you have, the less you will feel the need to panic-sell at an inopportune time,” Dogen explains.

This is especially important for people in the second half of their careers. If you’re approaching retirement, selling your investments at a loss can seriously damage your ability to fund your golden years. Younger people can continue to invest with a growth mindset even during a bear market, but older adults might want to consider rebalancing their portfolios to avoid risky investments. “Many investors haven’t felt the need to rebalance their portfolios in the past few years because recent performance has been strong,” Willmann explains. “The market’s decline this spring has caused those nearing retirement to reassess the risk associated with their investment allocation.”

Willmann also advises everyone to keep their emergency savings out of the stock market entirely — even during bull markets. “A true emergency fund should be held in an FDIC-insured account to mitigate the risk of principal loss.”

Career fluctuations happen. Be prepared.

The coronavirus pandemic taught a lot of people that their jobs, careers and small businesses weren’t as secure as they had once thought — even if they were working in an essential industry. “I personally learned that even the most recession-proof work isn’t guaranteed,” Geiser told us. “As a nurse, I faced furlough days and know many others who were placed on indefinite leave when medical offices and surgery centers closed.”

Going forward, more of us will need to be prepared for career fluctuations, job-hopping and periods of unemployment. If you are fortunate enough to be employed, do your best to build the kind of professional reputation that can either help you retain your job during company restructurings or carry you into the next phase of your career. “It’s more important than ever to stay visible in the workplace and try to add as much value as possible,” Dogen advises. Jobs may come and go, but added value always looks good on a resume.

Estate planning is key

The pandemic has taught many of us about the travails of working from home with kids and the importance of supporting local businesses — not to mention the fragility of life itself. “Unfortunately, the coronavirus has also served as a reminder to remain current with estate planning,” Willmann says. “Namely your will and healthcare power of attorney.” It’s a lot easier to create a will (which includes the opportunity to write a living will and set up power of attorney) than many people realize, especially if they work with a reputable digital company like Haven Life Plus partner Trust & Will.

Willman also notes the importance of setting up a life insurance policy, even during an economic downturn — and if you’ve already got a life insurance policy in place, it’s worth asking yourself whether you need to update your beneficiary designation. Unfinished or out-of-date estate planning documents won’t help protect the people you love, so take a few minutes today to get a free life insurance quote, begin the will-writing process or look into a revocable living trust. By doing the prep work now, you’ll ensure that you and your loved ones are as prepared as possible for whatever happens next in 2020 — whether that’s a recession, a second wave or something none of us could have anticipated.