My savings goals for 2021 are radically different from previous years for obvious reasons – the global pandemic is forcing many of us to rethink our long-term plans to save money, get or get a nest egg and anticipate future financial problems.
Vacation, layoffs, job losses … those were words we used a lot in 2020 and in the New Year it is entirely possible that, despite the promise of coronavirus vaccinations and a lot more, we will NOT see the real economic impact of the past 12 Have seen months with a long shot.
Saving goals = making certain assumptions
Why am i saying this? Because when you are planning your savings goals for the coming year, you want to be able to take on certain things. When times are good, your local businesses that stay in business rely on sales, advertising, partnerships, and more to survive and grow.
However, the open and closed nature of the western world's pandemic response means that some step on financial waters instead of thriving, and the true extent of the damage may not become apparent until a company tries to fully reopen it and without it going back online taking advantage of the same kind of cash flow, predictability in business, etc., of a "normal" year ago.
Layoffs, vacation days and the damage done
And that means that many of us are at risk of losing our jobs if that damage is fully assessed. It would be mere speculation on my part to try to find a percentage of local businesses that may have to close once the damage is fully recorded.
So my savings goals for 2021 are more like “income diversity goals”. What I want to do is hold my current level of savings but expect a year that could be financially tight.
Anyone working in the gig economy is taking a smart move towards having different streams of income, but in the current climate this is actually no longer an option … even for those who believe it is. In many cases, you cannot afford to rely on a source of income because you simply don't know what the future holds for your employer and then for you.
What is my advice? This could be a very good year to assume that no gig or job is 100% stable. And instead of saving less, it actually means trying to save a little MORE in the expectation that you may have to dip into your savings or emergency fund.
But in short, here is my best advice:
While you are still busy and have a source of income, it may be wise to consider planning for later in the year when money may run out. What does that mean? Slowly replenish over time what you may need at the exact time you need to cut your spending instead of maintaining your current levels.
This means different things to different people. In my case, this means I need to take some money NOW in anticipation of a big outlay that I will definitely have LATER – a laptop purchase is in my immediate future at the time of this writing as my current equipment is more than five years old and in many cases it is at the end of the support phase.
So I'm going to cut down on my usual indulgences (I can make coffee at home, thanks!) To eat a higher price than usual now, just in case I literally can't make the same purchase because of six months of loss of income.
What this means for YOU is up to you. However, it is a good idea to plan and think like this just in case. Most of the time when I do this, I later laugh at myself because there wasn't a major emergency after all. But there have been a few cases where my preparation has paid off, and I was genuinely glad I did.