January 24, 2021 8:00 am ET
With 2020 in the background mirror, and the end of the pandemic (fingers crossed) in view, there is a lot of economic damage to be assessed. But there are also many personal finance lessons we can learn – lessons that will put us in a good position, whatever the economic future.
Lessons about the importance of emergency cash and different income streams. Lessons about how this period really is which is not different (regardless of the degree feeling different). Lessons on how personal finance is truly personal. And much more.
Here are some lessons we heard about when we asked financial advisors and others to reflect on the past year. It was, without a doubt, a year that many people preferred to forget. But before we try to clear those memories, here are some things investors, savers and consumers would do well to remember.
Crisis occurs
One clear lesson from the turbulent past year is that more Americans should work to raise emergency funds at least a month of spending. An affordable emergency fund (held in an easily accessible form such as a savings or audit account) can help reduce the need for major cuts in spending when facing temporary shocks to your income. -a-steach.
While emergency funds cannot make up for losing your job and facing long-term unemployment, it can help reduce the impact of economic downturns in the short term. For example, last year many households had members that were split for several weeks while governments ordered them to close their employers.