Reflect and Prepare for the Financial Challenges of Year-End 2020
The most common year-end trend is to reflect on previous successes and errors, and in these trying times that the virus had brought upon us, there were numerous opportunities to prosper and fall through just as easily.
While some Americans had trouble keeping the lights on during this time, others capitalized on the weakened market, raking in massive profits while the supply chain struggled to keep up with the high demand from American consumers.
First and foremost, you should look into amassing money for your emergency fund, and while many Americans are still in the process of building one, it’s never too early to start, and the sooner you do, the more financially stable your later years will be.
A recent survey showed that 43% of American citizens have suffered numerous employment-related issues, ranging from reduced pay to job loss, at least once in their lives, and it’s during these times that this emergency fund comes into play.
If you’ve already tried beforehand, but couldn’t save up enough, just focus on starting without setting any financial goals for that savings account, because starting off is likely the hardest step in your journey to financial safety.
Your 2nd goal should be to stay on top of your student loan debt payments, especially now that the deferments are planned to end by May 1st, 2022, putting you on a 5-month timer to be able to afford the monthly payments.
Borrowers have stated that they’ll likely be forced to take on second jobs, find higher-paying primary jobs, sell personal belongings or even borrow from family members to cover these payments and none of these spells for an enjoyable living experience.
Not being ready for these payments will also set back your aforementioned emergency fund plans, closing the wicked circle of student loan debt that such a great portion of America’s future doctors, scientists, and leaders is plagued with.
Capitalizing on the oncoming tax season
Minimizing your taxes is practically on everyone’s mind, and with the year coming to a close and tax season right around the corner, everyone with even a basic knowledge of the USA’s tax system is looking to capitalize during this time.
Reports have shown that most workers don’t max out their 401(k) retirement plans and that only 1 in 10 individual retirement account holders actually contribute each year despite a large portion of them being eligible.
Health Savings accounts should always be maximized as they offer numerous tax advantages, and due to a survey showing that most workers do not understand how they function, certain worker rights groups have demanded that they be explained in full detail to the workforce.
Maintaining financial balance was pretty difficult over the course of the previous 2 years, with the stock market being more volatile than ever, taking massive dips only to surge back to new heights the following day.
Long-term investment plans can combat this and while waiting until you’re 70 to pull out your money does seem like a lot of time, you’ll be thankful to yourself for making the right choices.
Balancing your portfolio between stocks, bonds, and real estate is key to maintaining financial security, and with the technological advancements we have today, that process has now become fully automated, with the command center for it likely sitting in your pocket.
Even if it’s slightly more expensive than the traditional route, you can easily find an automated financial advisor who’ll take care of all the planning and balancing for you, which could be invaluable if you want to minimize risk while maximizing rewards.
To summarize, with the recent economic downturn in the USA, financial security has become one of the main topics that people are worrying about.
Try to build a strong emergency fund as soon as possible in order to weather any future economic storms. Make sure that you stay on top of your student loan payments and make use of tax season by capitalizing on 401(k) or Health Savings Accounts (HSAs).
Lastly, create a balanced portfolio consisting of stocks, bonds, and real estate investments in order to create a safe and secure financial future.