“Before I agree to 2021, I need to see the terms and conditions.” That is a post I recently saw on social media and you can even buy merchandise with that saying printed on it. Although it made me laugh out loud, it also made me pause and think. There are very few people who can say that 2020 was a good year for them overall, so it is no surprise that most of us were looking forward to the end of the year and welcoming 2021 with open arms. But what does the new year really have in store for us?

I am sure no one could have predicted 2020 and so, while we hope for the best for 2021, and all signs do point to a better year, we certainly don’t know what is to come. I think the key to having a better year in 2021 is to use the lessons learned in 2020 to set our financial resolutions for the new year.

CREATE AN EMERGENCY FUND AND ALTERNATIVE SOURCES OF INCOME

Job loss and salary cuts were commonplace in 2020. That meant many people either had zero income or were taking home a much smaller pay cheque, and thus learned two of the most important lessons of 2020 the hard way — the first being the importance of emergency savings or having alternative sources of income, and the second being cutting back on expenses.

When faced with no funds coming in, those who were lucky to have an emergency fund were able to dip into that to make ends meet. Many had to “tek hand tun fashion” which, for non-Jamaican readers, means taking what you have and making something new. In other words, they found themselves having to use their talents or skills to develop a new income stream. Others were able to supplement their depleted income with dividends or interest from their investments.

Whether you had to face this hardship or not, we all should learn from this and make one of our 2021 resolutions be the building of an emergency fund and the creation of more than one source of income. The rule of thumb is to have a least six months’ worth of living expenses in savings. The best way to ensure that you save regularly is by directing your bank to transfer a regular amount to a savings or investment account each month.

MAKE SOME CUTS PERMANENT

The year 2020 forced a change in lifestyle for everyone. Social distancing, restricted travelling, and closure of social venues such as bars and restaurants meant we all had to stay home more and find other ways to entertain ourselves. An unexpected benefit of not going out as much is how much money we saved. We also realised that we were guilty of a lot of unnecessary spending. I certainly saved a lot by not having to fill my gas tank as often and by doing less impulse buying in stores and supermarkets. Now my outings are very deliberate — I am going to buy something specific and want to be in and out as quickly as possible. No leisurely walks down the aisles of stores and the supermarkets. So, re-examine your spending. What have you given up in 2020 that you can keep giving up in 2021?

PUT YOUR AFFAIRS IN ORDER

The saddest lesson of 2020 was that millions of people were leading a normal life one day and then were cut off from their families the next, whether they were in hospitals, nursing homes or elsewhere. Even worse than this was the fact that so many people died without wills, plans or goodbyes. I, unfortunately, have attended Zoom funerals this year and seen close friends and clients dealing with grief and unfinished paperwork at the same time.

Make it a resolution in 2021 to get your affairs and the affairs of your loved ones in order. Show your older relatives how to use Zoom, online banking, and delivery services so that they can stay connected and get their business done if they are unable to move about. Ensure you have a will and leave instructions about what you would like done when you die. It will make your family’s grief more bearable if they don’t also have to be figuring out where you have accounts, what health and life insurance coverage you have, who you want to take care of your children, and all those other things we don’t really want to think about and plan for, but should.

POSITION YOUR PORTFOLIO TO ENDURE VOLATILITY

Between late February and March the financial markets plummeted but have since recovered, for the most part. This reminded us of what market volatility can do to investment portfolios and showed us what types of investments are better at weathering storms. So, in 2021, position your portfolio for future roller coaster rides using some of the past tips we have shared. If you have never worked with a financial adviser, this is a good year to start!

Happy New Year, and wishing you all the best for 2021 and beyond.

Toni-Ann Neita-Elliott, CFP is the vice-president, sales & marketing at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual, and institutional investor. Visit our website at www.sterling.com.jm

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