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To many Americans, 2020 was nothing short of an economic wasteland. And while 2021 may have improved the fortunes of some families — or at least have been less of a shock, emotionally and financially — it was still marked by the pandemic. Heading into 2022, COVID cases are rising yet again with the identification of a new variant, but this time, many Americans are armed with the vaccine and the knowledge that living in a pandemic for nearly two years has provided.
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No one can predict if and when economic misfortune may strike again — or indeed, when the ongoing effects of the pandemic will end — but there are some steps that all Americans can take to help protect themselves from future downturns. While it’s tough to prepare emotionally for such financial shocks, it’s important to remember that even in tumultuous times, the economy is cyclical. Having your financial affairs in order can help you make it through to the other side. With a little bit of preparation, you may be able to cushion the blow if a year like 2020 ever strikes again.
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Build a Bigger Emergency Fund
Emergency funds were traditionally thought of as backstops for short-term financial difficulties. If you needed some cash for an unexpected car repair, a dental emergency or a short-term job loss, for example, your emergency fund was the perfect source.
However, 2020 demonstrated that certain economic shocks could have deep and long-lasting financial ramifications. Thus, traditional recommendations to keep three to six months of cash in an emergency fund may be insufficient. If you have the means, building an emergency fund that can last at least six to 12 months may be a prudent move. In the event of a future financial calamity, having up to a year of savings available to draw from could make life a lot less stressful for you.
Read More: Prepare For Uncertain Times With 23 Tips To Build Your Emergency Fund
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Diversify Your Income Stream
One important economic lesson has been brought into sharp focus by the pandemic. Wherever possible, it pays to diversify your income stream. When you rely completely on one job or revenue stream for all of your income, you could face enormous financial pressure if that spigot is turned off.
If you have the time or ability, taking on an additional part-time job or a side gig in addition …….
Source: https://finance.yahoo.com/news/10-smartest-money-resolutions-2022-002936228.html
