Skip to main content

Money lessons we learned in 2020

Financially speaking, this year has put many of us in a bad situation. Due to the COVID-19 outbreak, over 36 million Americans have filed for unemployment. The ongoing pandemic will have a lasting impact on how we live, work, and handle our money. So far, the year 2020 has taught us the following money lessons:

Having an Emergency Fund is a Must

According to Investopedia, your emergency savings should cover between 3 and 6 month’s worth of living expenses. But, if this exceeds your possibilities, try to set aside at least $1,000 for emergencies. In case of an emergency, this should be enough to prevent you from reaching for your credit card.

Once you have those $1,000, you can steadily work toward building a larger emergency fund. If you believe you won’t be able to easily replace your income if you lose your job, or if you have an irregular income, it’s a good idea to save more than 6 month’s worth of expenses.

Your Estate Plan Cannot Wait

Thinking about one’s own death is unpleasant, so most of us avoid it—even when it is the smart thing to do. If 2020 has taught us anything, it’s that deadly diseases do not discriminate. They can take down healthy young adults just as easily as elderly folks.

The ongoing pandemic is forcing many of us to come to terms with the fact that every person will eventually have to face death. Because of this, it’s good to start planning your estate. And, you do indeed have an estate, even if you don’t own a house. Almost everyone does.

Prepare for the worst possibility ahead of time. Your family will appreciate it. At the very least, estate planning involves healthcare directives, making a will, authorizing your financial power of attorney, establishing a living trust, and making funeral arrangements.

It’s Important to Eliminate Debt

Debt isn’t always bad, but it can make it hard to reach financial independence. More debt means more fixed obligations. Too many of these obligations can kill your financial dreams, so it is important to bring them down to a minimum.

The first step to eliminating debt is adding up your recurring debt payments. Take a few moments to figure out how much money you are spending on your credit cards, student loans, car payments, mortgage, and other loans.

What percentage of your monthly income goes to settling these debts? Now, go back to your emergency savings for a moment. How much money do you need to put aside to have 6 month’s worth of living expenses? If you eliminated all or some of your debt, how much less would you need to save?

If you can’t afford to pay off your debts right away, you could try transferring your credit card balance to a lower interest rate credit card (ideally 0%). You can also try to refinance your student loan or mortgage to a low-interest rate. This will save you money in interest and reduce your monthly payment. It can help you repay your debts quicker.

Managing and restructuring debt isn’t always that straightforward, so it’s a good idea to get some professional help. Although most often accountants market themselves as tax experts, they should also be able to analyze your debt and offer you some good advice. If you don’t have an accountant, hiring a financial advisor to help you handle your debts will undoubtedly pay off.

Going on the Defensive is Okay

This year, our consumption-based economy has taken a 180° turn. Many of us have had to delay major purchases and expenses such as buying a new house, getting a new car, and doing a kitchen remodel.

The ongoing crisis has made us reevaluate our wants and needs. Yes, you probably should replace your old car, and you may need a new kitchen, but putting these major purchases on hold probably won’t hurt.

If such delays can greatly improve your financial situation, they are a great move. For instance, you may eventually be able to pay for a new car upfront, without getting into debt, if you delay the purchase for a couple of years. Going forward, this will give you better cash flow.

But don’t stop with bigger purchases. A return to home economics is one clear advantage of this year’s unforeseen events. Fewer expenses equal more savings.

Due to the coronavirus pandemic, Americans are saving an average of $219.17 a month. At first glance, this doesn’t seem like much, but this adds up to $2,630 in annual savings.

People are ditching their yoga studios and gym memberships for online classes, and this isn’t necessarily a bad thing. If hosting movie nights at home or coloring your roots by yourself can result in an extra two and a half grand per year in savings, isn’t it worth it? Consider keeping your expenses low even when the storm passes.


The events of 2020 will have a lasting effect on our money habits. From DIY haircuts to estate planning and emergency savings, people will be taking a more prudent approach to their finances—and that’s fine. A more mindful approach to money management can lead to much less financial stress.


I’m Rebecca, a translator and avid traveler, a book worm and horror flick enthusiast. My job has given me the amazing opportunity to travel to dozens of countries around the world, and writing on Rough Draft gives me a chance to try to showcase some of them.


Popular posts from this blog

Copycat Boston Pizza's Bandera Bread

Have you ever had a craving for something but then once you looked at it you realized, I can make that myself for next to nothing? That's how I felt last night I thought about ordering in some food but then realized I really don't want to spend any money. I really wanted pizza bread from Boston Pizza. So I recreated it and oh my goodness was it ever good. Try some of these great recipes too!  Pizza Bread Dough 1 cup warm water 1 tsp instant yeast 1 tsp sugar 2 cups flour  Seasoning 1 tbsp melted butter 1 tsp garlic powder 1 tsp onion salt 1 tsp parsley 1 tsp rosemary 1 tsp basil 1 tsp oregano 1/2 tsp sugar 1. Combine the water, yeast, and 1 tsp of sugar in the mixing bowl and let stand for 5 minutes. Add the flour and salt and mix until a ball of dough forms. Roll ball onto a floured counter top and knead for a couple minutes.  2. Put dough in an oiled bowl and let rise for 30 mins in a warm place with a clean cloth draped over top. While your doug

DIY Table Revamp - Guest Post

Hi all! I'm Tiffany from This Motherhood is Brought to You by Xanax and I am so excited to be a part of the Guest Post Swap and to be Amanda's swap partner! I love love love her idea on how to make indoor snowballs with egg cartons. I am definitely going to have to try that with my kiddos since my smallest one has decided that it has to snow for Christmas. Poor baby doesn't know snow is hard to come by in Alabama :( For my guest post I wanted to share a little DIY with you guys that involves duct tape! A few months ago my daughter's little chair that goes with her table she sits at every day tore and she made it worse by pulling all of the stuffing out of the seat! What started out as a quick fix turned into a great idea. She loved her seat so much that she has now decided that her table has look cool too so being the smarty pants that she is, she tore her table!

Amazing Ways To DIY Your Nails In The New Year

Having beautiful fingernails can really boost a woman's confidence. Not only do they feel sexy and sassy but they look well maintained and professional. There are a number of different styles of manicures you can get done professionally but they can be costly and if you are trying to stick to a budget and save money it is best to give DIY a try. These beautiful nail designs are easy to do and look fantastic. There are some that are more intricate and some that are simple but all will be amazed that you made them yourself. Try using small gems and crystals at the tips to add a touch of sophistication.  Tips make a world of difference and they can be as easy as you wish. There are so many beautiful polishes that have amazing colours you can match. These simple nail designs can be done by any busy lady and make a lasting impression to anyone who comes across them. Hot Beauty Health has all the instructions for these super simple nail designs. There are a large number