Money Lessons Learned in 2020 That Redefined Our Goals
Is it just me, or did 2020 completely suck?
I’m hoping yours was better than what I’m pretty sure was a very low average. As the new year begins, it seems appropriate to sift through the rubble for possible bright spots or lessons learned. I mean, it would be nice to make it all somehow meaningful, at least in retrospect, right?
I’m going to let you in on a little writing secret. This is where I’d typically follow up with a few examples of what those things might be in order to ease us into the main focus of the post. This section is supposed to help the reader (that’s you) and the writer (that’s me) connect a bit while we begin zeroing in on the specific topic. The first example should be something positive and obvious, the second one something slightly more thought-provoking. The third would be the twist – humor through thwarted expectations. Ha! That Blaine! So likeable, and thus so trustworthy! I can’t wait to hear his insights on money lessons!
The problem is in the topic itself.
I mean, what do YOU think of as soon as I mention 2020?
Yeah, exactly.
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What We Learned About Money In 2020
It’s already personified in our collective psyche as the villain in everyone’s story. We’ve posted, tweeted, argued, wept, denied, avoided, and sat staring blankly into the void over the weird new national zeitgeist it created, or revealed, or… something. I can be a bit abrasive sometimes, but even I’m not bold enough to figure the same topics that had us fighting with our in-laws and former friends over the holidays are fair game on this one.
Instead, I’m just going to lay my cards on the table. I thought this was a rotten year. I didn’t like what I learned about myself or many of those around me. And I hesitate to make any sort of general statements about the pandemic, masks, the election, politics, protests, or social upheaval of any kind. This was the year in which Tiger King, Murder Hornets, and a new branch of the military were the lighthearted, fun parts. It’s not a field full of landmines – it’s a field MADE of landmines.
So I won’t be waxing clever about your favorite social hot button topics by way of introduction. Honestly, it would be too much of a downer.
Whatever else 2020 brought, however, it certainly highlighted some fundamental money lessons worth considering. I genuinely believe these are things we can all benefit from revisiting. If you’re already doing some of them well, be encouraged – not all of us held it together quite so well over the past year. If you learned some painful lessons, please know you were far from alone. Whatever your current financial status, there’s no time like now to take a deep breath, set your feet in the present, and point your face towards the future.
Maybe we can’t control all of it, but we can control the parts we can. (And yes, that sounded much more profound in my head than it did once it was written out.)
Here are what I believe to be the five most important money lessons we learned in 2020.
1) You Can Never Have Too Much In Reserve
If you’ve read the blogs here, or anywhere across the Goalry family, before, this isn’t exactly news. When I’m a bit distracted by the weird world around me, however, sometimes my financial goals unintentionally drift off of my radar. 2020 was a year which drove home the importance of having appropriate reserves. Sometimes the most important money lessons are the ones most painful to learn.
I’d say this one counts, wouldn’t you?
Remember when we were all hoping if we could just find enough name-brand toilet paper, all of our other problems would fade? Then it was random items we suddenly couldn’t find at the grocery store – pizza sauce, ground beef, pretty much anything used to clean or disinfect. For weeks I couldn’t locate even off-brand onion soup mix, which I use in just about everything (hey, I’m a financial writer and educator – not an elite chef). These were inconveniences, sometimes seriously so, but they weren’t crises. Not by themselves.
Not having sufficient savings to weather reduced hours or job loss, on the other hand… there’s no softening that reality. Finding yourself unable to pay rent, pay for medications, or even go to the grocery store often enough to notice what they’re out of – it can be terrifying. Humbling. Crushing. It’s not just about coming up short. It’s the feeling of being unable to take care of those we love the most, and for whom we’re responsible. It doesn’t matter whether it’s our “fault” or not when we hit those sorts of walls. All that matters is figuring out how to fix it. First things first: You need to open a savings account.
The Journey Of A Thousand Miles…
Imagine this past year began with you having 3 – 6 months of living expenses in “emergency savings.” That means if you were to suddenly lose 100% of your income, you could access and live off of that money for up to six months without losing your home or sacrificing basic needs. How much of a game-changer would that be?
Am I seriously suggesting we begin 2021 by somehow setting aside half-a-year’s salary just in case it all happens again in 2022? No, not unless that’s for some reason feasible for you to do – in which case, YES, YOU SHOULD ABSOLUTELY DO THAT. For the rest of us, however, what I’m suggesting is that we renew our commitment to building up our savings, or starting an emergency savings account if we don’t have one. Yes, in the middle of the pandemic. Yes, while employment is still problematic. Yes, while everything’s chaotic and we’re not sure what’s going to happen. If you can make progress with your savings now, imagine what you could do if things ever return to… well, whatever “normal” looks like on the other side.
Search these very blogs for ideas on shaving expenses in practical ways. Using technology to “micro-save.” Shopping smarter. Managing major expenses more effectively. If you can’t focus on the thousands, focus on the hundreds. If you can’t see the hundreds, start with the tens. Save $10 this week somehow. Commit it to savings. Next week, save $10 more. In a year you’ll have over $500, plus (very minimal) interest. You know what that means? It means you’ll have $500 more than you will if you don’t start. And honestly, with an hour a week devoted to taking more effective control of your personal finances, it can quickly become more than that.
Yes, I’m serious.
Try to remember those halcyon days when you just knew there was another role of toilet paper in the cabinet and plenty of Hamburger Helper on the shelves at the store. Now multiply that by everything you do all year. Somewhere between hoarding (not recommended) and simply winging it as you go (always a bad idea) lies being appropriately prepared.
Control the parts you can.
That’s easily one of the most valuable money lessons of 2020. Probably of a lot of other years as well.
2) Pay Attention to the Big Picture; Take Responsibility for You and Yours
I don’t know about you, but I found myself rather distracted by national events this past year as much as I did by the major Onion Soup Mix Crisis of 2020 (which I may have mentioned above). In case you happened to miss it, everyone is mad at everyone and the government might be fake and I’m still not clear on whether or not it’s OK to still like Harry Potter books.
The problem with so much chaos swirling around “out there” (or at least one of the many problems) is how easily it draws our energy and attention away from the people we most care about and our personal responsibilities to ourselves and to them. I’m not suggesting we ignore or completely tune out the “real world.” In 2021, however, many of us could do a better job paying enough attention to the big stuff going on around us to make good choices and be responsible citizens, but then tuning it out to focus on our significant others, our kids, our homes, our jobs, our hobbies, our friends, our interests, and yes, ourselves.
If you can think way back to pre-2020, the term “self-care” was trending quite regularly across social media, bestselling book lists, TV talk shows, and the like. The basic idea is that we can’t be or do our best for others unless we’re willing to address our own emotional, physical, or spiritual wants and needs. It’s not about being self-centered so much as it is learning to run some self-diagnostics and recognize the power of eating better, getting enough sleep, expressing our emotions, staying active, and the like.
Taking more intentional control of your finances is a part of that. I’m not going to tell you that money is the most important thing in life. It’s not. But it’s AN important thing in life. More significantly, for better or worse, it impacts almost everything that IS important to you in your life – people, experiences, security, education, comfort, etc. Managing your finances isn’t about prioritizing money any more than eating better is about prioritizing food. It’s about controlling the parts you can control so outside events have less control over you.
3) Debt Is Annoying
Like the importance of savings, this one isn’t exactly news to anyone who’s been paying attention. If we’re talking about the money lessons of 2020, however, there’s no doubt this was a biggie – new or not.
I’m not one to dogmatically declare that all debt is evil. Like adult beverages, video games, or anything with “pumpkin spice” in the title, debt can play a role in a healthy, balanced life. Also like those things, it takes very little for it to go from zesty add-on to destroyer of worlds. Too many Americans live essentially paycheck-to-paycheck, with much of each biweekly electronic deposit going to pay for things long gone – trips to the mall, dinners out, electronics we’ve already replaced, or vehicles which no longer look (or smell) fresh and new.
As you’ve no doubt noticed, debt has a way of snowballing. We don’t just owe what we’ve charged or borrowed; we owe interest and sometimes fees on what we’ve charged or borrowed. As the months go by, we owe interest and fees on the interest and fees of what we once charged or borrowed. Miss a payment here or there, and we now owe late charges, and eventually interest and fees on the late charges for the interest and fees on what we once charged or borrowed.
It gets a bit ridiculous when you step back and look at it clearly. So, yeah – debt is generally a much bigger problem than we’d like to admit. Maybe “evil” isn’t so far off after all. Paying down debt is at least an easy Number One on any list of good financial goals. It’s also easily one of the most important money lessons of 2020.
Remember That ‘Thousand Miles’ Thing…
Making a change doesn’t require paying off all of your debt at once. It doesn’t mean you have to start buying lottery tickets or committing felonies to come up with extra cash (both are activities we’d rather strongly discourage, actually). I’d ask you to set aside an hour a week – 30 minutes, twice each seven days – to read through some Goalry blogs about paying down debt. If it will make you feel better, you can check out some of the other reputable financial sites out there as well and see how often the advice matches up. After a few weeks, start applying one or two of the strategies you find most practical. Once that’s happened long enough to become a new habit, add another.
Getting into debt doesn’t usually happen overnight (although it certain happens more quickly than most of us would like). Getting out won’t be instant or easy, either. But it is possible – as long as you start.
4) There’s No Place Like Home
When we can’t go anywhere, Americans spend more time fixing up our own homes. Even Fox News noticed and shared a rather fascinating little piece about it online:
The average household spending on home services such as maintenance, landscaping and cleaning projects jumped to $13,138, up from $9,081 on average in 2020, according to a new State of Home Spending: 2020 report by HomeAdvisor…
The average homeowner also upped their home projects to 11 this year, up from 8.1 in 2019 — a 23% increase…
Dang. I’d have probably noticed this particular report when it was first posted last month, but we’ve been so busy remodeling our upstairs bathroom that—
Oh. So… yeah, that checks out.
Turns out all that extra time at home has led to the natural desire to make the space more practical and comfortable for more than coming home to sleep and eat.
The top reason for home improvement spending was to make the home better suit lifestyle needs, according to 41% of all consumers surveyed. By contrast, in 2019, the No. 1 reason for home improvement was to replace or repair damages, defect or decay, suggesting that the coronavirus pandemic has affected people's lifestyle and spending habits.
It’s worth noting that the report suggests the money used for additional home repairs and renovation largely replaced what those same households would have spent on travel, eating out, or recreational shopping. It’s important to take care of your home. It’s even more important to take care of your budget in the process. If you decide to get a loan in order to make your house as comfortable and suitable for your needs as possible, put everything on paper first and think well before you make any big financial decision.
5) Don’t Give Up
Whatever your personal opinions about specific issues over the past year, you’ve probably heard many people complaining about how exhausted they feel. Discouragement is up, anger is high, emotions are raw, and despair is far more common than healthy for any of us.
2021 is, however, a new year.
I’m not begrudging you your feelings or passions. I’m suggesting one of the money lessons of 2020 – and possibly one of the personal lessons as well – is to channel those worries, passions, hopes, and beliefs into more productive directions:
Start saving if you’re not already.
Increase your retirement contributions if you’ve already got a plan through your employer.
Put more focus on paying down debt.
Educate yourself a little every week about mortgages, income taxes, investment options, or how credit reports work.
Get a cool app to help you save or invest or keep track of spending.
Give $10 a month to a cause you care about. Better yet, give 2-3 hours a month instead. Get informed, then get involved. You may be surprised how quickly you feel less out-of-control, less discouraged, even less overwhelmed.
It’s not about changing the world in one weekend; it’s about changing your approach to the world – including your personal finances – one step at a time.
Then you keep going. And you keep going some more. And then a little more.
Finally,
And just to keep things interesting, let’s meet back here in a year and see how it went. In the meantime, let us know if you have questions or if there’s anything we can do to assist. You survived 2020. There’s pretty much nothing that can stop you now.