Look, there's very little about 2020 that I want to carry into the new year. The quarantining, the job insecurity, the canceled events - get lost! But there are a few good money habits that I think we should all keep up with even after the threat of COVID-19 passes.
In April 2020, Americans increased the amount of money they set aside for savings by 20%. That's the highest it's been since 1960! Of course, we did this out of fear for the economy, our jobs, and the wellbeing of our families, but the case still stands. For many of us, 2020 was the year we finally got serious about our finances.
These are the three good money habits I think we should all carry into the new year and beyond!
My Top Good Money Habits From 2020
1. Prioritize your emergency savings.
None of us could have anticipated a global pandemic. You can't truly anticipate any of life's emergencies; that's what makes them such a pain. What you can do, though, is set aside an emergency savings fund to protect yourself from the worst-case scenario.
A solid emergency fund should cover at least 3 months of your total expenses. That way, you'll be protected even if you're unable to work or between jobs. Use it for big emergencies (like an injury) or small ones (like your washing machine going out). When you can rely on savings during an emergency, you can avoid racking up credit card debt. One less thing to worry about!
2. Focus your spending on what's fulfilling.
When you're forced to cut your 'fun' budget, you realize what truly brings you the most joy. Personally, quarantine forced me to slow down and really consider what I was spending money on. It made me realize how much money went towards frivolous purchases and how little of my spending actually enriched my life. Let me tell you, it was a bit of a shock!
Maybe you haven't had any occasion to wear new clothes but you're already looking forward to the next event you can shop for. Or perhaps experimenting with new recipes has made you realize you prefer home-cooked meals to eating out. Whatever purchases make you the happiest, prioritize those! Cut the rest out of your budget, and re-allocate those funds towards savings.
3. Invest in your wellbeing.
Since the start of the pandemic, more and more people have put money towards their mental health and wellbeing. Game changer!
Whether it's counseling, a fitness program, professional development courses, a financial coaching program, or even home improvements, investing in your own betterment is almost always a smart move. Set aside a little bit of money each month to either invest in self-care or save towards a greater wellness goal. Consider it your self-care budget!
Good Money Habits Make a Difference
Hopefully, the world will go back to normal soon, and we can all reschedule our events, travel the world, and hold our loved ones tight once again. Until then, let's keep working towards our financial goals and nurturing our good money habits. It's all about the baby steps!
If you're committed to getting on top of your finances this year, let's schedule a Strategy Session! In just one hour, we'll explore your money habits (good and bad) and create a financial plan you'll actually want to stick to. Click here to learn more!
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