The unprecedented happenings during the year 2020 had taught us a lot of things. It was a very difficult year, but in exchange for the challenges, we have collected important lessons that shaped us to be better at facing trials.
One of the major aspects that had been greatly affected is our financial lives. While it may be difficult, we have to reflect on these trials to learn from it.
Here are some top financial lessons to keep in mind:
Living Within Your Means
The year 2020 had definitely brought this saying back to the surface. A lot of people were reminded of this long-time rule that may have been forgotten and left in the dark. Leaving within your means tells us to find the perfect balance that will allow you to keep your cash flowing without resorting to acquiring credits or debts as much as possible.
Look at your expenses now and see if there are some items in there that you don’t necessarily need. At this point, you should only focus on the very important costs in your business or your personal life. There will be some sacrifices, but it is surely worth taking. You definitely don’t want to overspend especially now, so be smart about where your money is going.
Have a Cash Cushion
Most financial experts recommend having an emergency fund or a cash cushion.
Many people realized that having a cash cushion provides peace of mind since you know that if anything unexpected comes up, which of course always happens in life, you have money to pay for it versus paying it with debt or taking from long-term investments.
Budgeting is Essential
Budgeting is key to healthy financial health, but unfortunately, some people are forgetting this rule and set this task aside until it’s too late. Whether it is for your personal use or business use, budgeting is a MUST.
Budgeting will give you an insight into your fixed costs, variable expenses, and more. With a budget in hand, you can also plan long-term by judging whether you can survive with the income you are getting now for a certain period of time in the future. A well-planned budget will set you on the right path of informed decisions for your personal or business financial health.
Reviewing Insurance Policies and Coverage
Insurance is the glue that can hold everything together in your financial life if something catastrophic happens. Insurances such as health, auto, home, disability, life, long-term care, business, etc. are really important but having the right insurance policy and coverage in place for each is the most important part.
Take time and review all the insurance coverage you have and make sure it is up to date and still accurate. Sometimes you may have a life insurance policy in place for years but fail to realize there is now a better product in the marketplace with more coverage or better terms.
They say that challenges bring the most valuable learnings and that proves true with what we have experienced during the year 2020. Keep these learnings in mind and continue growing.
FAS focuses on providing financial insights that can help you and your business. If you need assistance with bookkeeping, business and/or individual income tax return preparation or cross-border taxes, feel free to contact us! Reach us at firstname.lastname@example.org or at 713-855-8035.