Merriam Webster’s word of the year is “pandemic.” No surprise, since a pandemic hit the world this year, affecting not only our lives, but also our wallets. Have our finances been in chaos or have we come through the pandemic well? Are we prepared for what’s next? It’s a good time to look at our financial situation and make some positive changes. But first, we need to learn the financial lessons of 2020:
– The need for an emergency fund is real. I can’t emphasize this enough. Having such a fund would provide a cushion against unexpected setbacks, such as illnesses and unemployment. Most people should have learned this by now. Although the suggested amount for the fund is three to six months’ worth of your expenses, you may need to save up for more after this year. Sure, putting more cash in a low-yielding account produces less returns, but this creates more peace of mind.