The COVID-19 pandemic has taught us all some tough lessons – lessons about preparation, lessons about smart decisions, lessons about perseverance.
We also learned some tough financial truths over the past year. In its own clinical and uncompromising way, the pandemic has shown us things about money that we didn’t necessarily know before.
Don’t miss out on these tough lessons. Your smartest move is to face these truths head on – taking real, proactive steps to reduce your debt, lower your bills, and secure your future.
Here are the tough financial truths we learned from 2020:
1. Always have an emergency fund
Last year taught us the hard way that everyone should have an emergency fund. You never know when you will lose your job or face some other disaster.
You need a place where you can safely store your savings – and still make money from them. Nothing will help you under your mattress or in a safe. And a typical savings account isn’t going to do you much better. (Ahem, 0.06% is nothing these days.)
But with a debit card called Aspiration, you can earn up to 5% cashback and up to 16 times the average interest on the money in your account.
Not too shabby!
Enter your email address here to receive a free Aspiration Spend and Save account. After you’ve verified your email, securely link your bank account so they can help you get extra money. Their money is FDIC insured and they use military grade encryption which is nerd talk for “this is perfectly safe”.
2. Make sure you have life insurance; Prices start at $ 5 / month
During the COVID-19 pandemic, interest in life insurance has increased as more Americans realize they likely need it. Overall, Americans bought about 10% more life insurance in 2020 than they did in 2019 – the biggest increase in nearly two decades.
Have you ever thought about how your family would do without your income in your absence? How are they going to pay the bills? Send the kids through school?
For many people, social distancing regulations and fear of contagion have deterred them from seeing a doctor for a personal exam. As a result, more and more people are looking for exam-free life insurance like the one offered by a company called Bestow.
It can take a few minutes to apply, and prices start at just $ 16 per month. Knowing that your family is being cared for is priceless.
If you’re under 54 and want a quick quote on life insurance without a medical exam or even getting up from the couch, get a free quote from Bestow.
3. Start Investing: This app gives you up to $ 200 in free stocks
Obviously, 2020 was a bad year financially for many of us. But some people cleaned up because they invested.
- In early 2020, a share of Amazon was priced at $ 1,900. At the end of 2020, it cost $ 3,250.
- In early 2020, a share of Tesla was priced at $ 96. It ended up costing $ 705.
The best time to start investing was a year ago. The second best time to start investing is now. Whether you have $ 5, $ 100, or $ 800 to spare, you can invest with Robinhood.
Yes, you’ve probably heard of Robinhood. Both beginners and professionals love it because it has no commission fees and you can buy and sell stocks for free – with no limits. Plus, it’s super easy to use.
What’s the best? When you download the app and add funds to your account (it won’t take more than a few minutes), Robinhood will leave a percentage of free shares in your account. It’s random, however, so the stock can be worth anywhere from $ 2.50 to $ 200 – a nice boost to help you build your investments.
4. Keep track of your creditworthiness
There are several ways the pandemic may have lowered your credit score in 2020:
- You were late with credit card payments.
- You have used up most or all of your available credit.
- You cannot afford your mortgage or student loan payments. If you have a state mortgage or state student loan, you could ask for a delay, but that doesn’t include all of them.
It is also up to you to verify and ensure that your paused mortgage and student loan payments are properly reported on your credit report.
A great way to keep track of this is with a free website like Credit Sesame that will help you keep track of your credit history. Credit Sesame shows you your credit history, checks your credit reports and keeps you informed of any changes. It also shows you how to increase your score.
5. Ask for help – even if you normally wouldn’t
When you find yourself in a particularly dire situation, do something you normally wouldn’t: raise your hand and ask for help.
Sure, many of us would rather do anything than ask for help, but these are unprecedented times and life is a little bit out of our control right now.
For example, if you are having trouble making your mortgage payments, contact your lender. Sure, foreclosures and evictions are not allowed at the moment, but your accounts could still be moved into debt collection and you could still face fines.
You may need to prove you’ve been laid off or in need of financial assistance, but it never hurts to ask about your options for relief.
The same idea can be applied to any of your other bills – rent, utilities, cell phone and car payments.
You won’t know the answer if you don’t ask.
6. You shouldn’t pay too much Anything
Given our tight financial margins in 2020, not enough of us have taken action to cut our monthly bills. For example, when was the last time you checked car insurance prices?
You should buy your options every six months or so – this could save you quite a bit of money. But let’s be honest. It probably isn’t the first thing you think about when you wake up. But it doesn’t have to be.
A website called Insure makes it super easy to compare car insurance prices. All you have to do is enter your zip code and age and you’ll see your options – and even discounts in your area.
With Insure, people saved an average of $ 489 a year.
Yup. That could be $ 500 in your pocket just to take a few minutes to consider your options.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.