2020: A (Financial) Year We Should Never Forget

I know that it’s a little difficult to look at 2020 with a “glass half full” mentality, but sometimes that’s the only way I could keep my sanity. Really, when I look back, some good things did happen. Maybe you can relate to some of them?

• I’ve learned more about my exercise needs.  I learned that I need to go to the gym every day and that I’m a group exerciser.  I need the accountability (I guess it was hard wired into me from all of those years of playing team sports).  More importantly, I learned that exercise isn’t about my weight, it’s about my mental health.  My stress level increases drastically when I don’t exercise.  My kids can tell you – look out if you catch me on a day I didn’t get a workout in!
• I don’t miss being busy every night of the week.  With two middle school girls, we were pretty much on the road every night between sports practices, scouts, and other school activities.  It took a bit of an adjustment, but it was great to catch our breath.
• I need structure – see exercise – and I need to have a game plan every day.  Each night, before going to bed, I need to figure out the basic structure for the next day and what projects need to be accomplished by the end of the following evening. Then I can relax.
• I actually can work from home!  I’ve always thought that I would be too tempted to watch trashy TV in the middle of the day and not get my work done.  Now, I hit my office at 5 AM to knock out emails and paperwork and get work done when my brain is the most productive. I take breaks for really important parts of my day like getting the kids up and out the door to school and going to the gym, but other than that, I have so much to do each day that I don’t have time for trashy TV – except for during lunch when I’ve been known to indulge on my guilty pleasure and watch half an episode of Bellow Deck. 

I’ve also noticed some positive changes during 2020 in how some of us think about money – we’ve even established some new habits that will affect our finances long term. Here are a few things I’ve seen with clients – and in my own household.

Budgeting

As a family, we’ve really focused on structuring our budget this year.  We didn’t do it because of the pandemic, we did it because it needed to be done.  I used to track every expense (I have Quicken entries going back to 1998!). Our goal this year was to simplify. 

• We have an auto-bill pay account so that everything is paid automatically. 
• We have a spending account, and we have what we call our 20% account: twenty percent of our paychecks go into this account for savings or paying the occasional big bill. 
• We’ve decided how much we will spend in a given month to stay within our budget.  So, when the spending account gets low, we stop spending. 

No more tracking every penny – but as a family we are actually more on track with our financial goals than before.  DaVinci famously said “Simplicity is the ultimate sophistication.”  That was my goal for the year.

Investments

My clients who have distributions learned something very valuable: planning works. As a result of having a distribution plan for all of my clients who are currently taking in an income, when the market tanked, I had the pleasure – and I mean pleasure – of calling all of them with good news (I know – crazy, right?) and telling them that we had planned for a significant market downturn to happen at some point in time and our planning was a success.  This meant that their assets were positioned so we didn’t have to sell anything when it was down and that they had significant cash to sustain their income stream while we waited for the market to come back.  While this wasn’t something new, it significantly reinforced why we plan the way that we do, and it felt really awesome. 

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Emergency Funds

No year in recent history – even the downturn we all saw in the 2000s – reinforced the importance of an emergency fund like 2020. The clients who had three-month emergency funds (the minimum I recommend) built them to be closer to four to six-months’ worth.  On the flipside, I also saw the concern that some of my clients had for others in their families who either hadn’t established a back-up plan or whose needs exceeded what they have saved. In those cases, several clients increased their emergency funds so that they were ready to backstop their adult children if needed. And that’s okay.

A (Financial) Year We’ll Never Forget

I know that it’s sometimes hard to look back on 2020 and try to find the good in a year that seemed to be nothing but bad. But just as the negatives might leave a long-lasting impact…the positives can, too.

If 2020 had you re-examining your finances and left you with questions about how to best move forward, let’s talk about it. Don’t allow yourself to feel more overwhelmed than necessary. Working with someone dedicated to helping you stay on the right path – no matter what happens – could be another positive result of a tumultuous year.

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