Saving and investing in 2021 is challenging. The state of the U.S. economy in 2021? It’s complicated. There’s a labor market shortage in some sectors, and meanwhile there is an increased demand for labor. According to some sources, we’re going to see some fits and starts going back to anything close to “normal”. Employment for many is a tricky issue, and having a dependable cash flow is the key to saving and investing in the best of times, let alone now.
American Economy Contradictions?
We live in complicated times. There is, by some reports, a contradiction between the demand for labor and the some 500 thousand people who filed for unemployment benefits who filed in ONE WEEK. That said, jobless claims have hit a 13-month low according to Bloomberg Global Financial News.
Are you one of the people out of work, facing a work stoppage? Saving and investing is a completely different situation when your income is reduced or stopped altogether. What can one do?
Saving, Investing, And Job Loss
It’s a complete no-brainer. When your monthly budget is hit by a work stoppage, or already being damaged by one, will you stop putting money into your investments and savings accounts? This is a temporary smart move when mitigating the damage to your business-as-usual financial situation.
But what you should NOT do is to panic, raid your 401K or savings, and take such last-resort measures too early.
But what about those options? There is a hierarchy of things you can do before you begin tapping into the funds you have worked so hard to save. Some of these are very obvious, but they do add up. Others are not so obvious. Some of these cost-cutting measures you might never consider otherwise. Before raiding your savings account or 401k.
Take These Steps
- Cut your subscriptions
- Reduce your indulgences (restaurant delivery, Amazon purchases, etc.)
- Change your insurance deductibles to reflect your pandemic driving habits
- Call your credit card companies to ask for modified monthly payments
- Call your home loan lender to explore your options for modified or suspended payments
- Explore your loan refinance options, but make sure you don’t add more financial liability by doing so. Ask the lender about streamline refinance options where available and how to get into a lower monthly payment
- Consider a small personal loan if you are in dire straits. DO NOT apply for a payday loan, pink slip loan, or other non-collateralized lending. These loans cost far too much and will actually create a much bigger financial burden. Go to your usual lender. Ask about a personal loan to help you weather the pandemic.
Use your savings account as a last resort. The reason I give this advice? In my own personal experience, best results come from reserving the cash in your savings account. Reserved for unanticipated emergency expenses down the road.
My car will break down at just the wrong moment, or I will have an emergency dental procedure or other issue that requires some immediate cash. If you don’t take these random issues into account when planning your finances, you are already on the losing side of the equation.
If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.
Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.