2020 - What a Year

Well here we are in Dec 2020. What a crazy and unprecedented year it's been.  Event cancellations, business closures, border closures, we saw it all this year.

We've all heard and seen the negatives that occurred, but I want to focus here on moving forward, and what the positives are and will be.

Firstly business.  With borders re-opening, finally, many businesses are returning to trade, which brings with it the staff that may have been laid off or placed on significantly reduces hours.  Businesses re-opening will re-establish all the related trade relationships including Suppliers, Growers, Transportation, and all the staffing needed for those businesses.

In this lead up to Christmas, an already busy time for most retailers, this will hopefully see those businesses that were on the brink of collapse, finally able to pay rent, pay wages, and importantly pay themselves and keep their business alive.

Secondly border re-openings will finally allow for not only family members to finally see their loved ones, but also allow those people who want to get away from everything, to take that vacation, be it locally or interstate.  Again, the flow on benefit to the struggling hospitality sector, especially here in sunny Qld,  will be most welcome, and again see staff back in work.

What do we take away from 2020?

If nothing else, planning and budgeting.  Unlike the State & Federal Governments, the average person can't simply print more money or issue Bonds to keep their lifestyle going.  The man in the street needs a plan, and that plan should always include a cash reserve.  This can be called whatever you like, but I call it the "In Case Sh*t Happens Fund"

Your hot water system blows up.... Your kids needs emergency medical treatment....  The family car is stolen and insurance won't replace it, or worse, you're involved in an accident that's not your fault, and the other party doesn't have insurance to cover your repairs or vehicle replacement. Yes you can borrow money for this, but should you have to?

Let's include now the fall out from 2020 ....   You're placed on indefinite leave from work with no income to pay the rent or mortgage ....   Your business is forced to close for a week, a month or longer and you still need to pay full time staff and the lease.  Where's your money coming from?

I've said in many posts that everyone should have a budget. Know what's coming in and what's going out each month.
That budget should include first a sum of savings that comes out of your income before the bills, and placed into a separate savings account.  If the month's bills are higher than normal, you have the money to cover them.  If the monthly bills are less, then your savings increases.

Yes, those savings can be put towards your first home, second home, or investment property.  That ultimately comes down to your goals and planning, as i've covered in previous posts. But regardless, we all need to have that cash back-up just in case. 

If you have a Mortgage, you should have at least 3 to 6 months' repayments in savings.  That can be a separate account, or in addition to the normal loan repayments. I'm not saying that it'll be easy to accumulate, but nothing worthwhile is. And with interest rates at historically low settings, if you can't afford your repayments and be able to put money aside, maybe you've borrowed more than you should.

Now more than ever, there's never been a clearer example of why everyone should have money aside for that "rainy day".  The "In Case Sh*t Happens Fund".  Because one day, it will happen, and there may not be the Government bail out to help out.

I hope that those people who lost their jobs due to matters outside their control will return to work and are able to move on with their lives.  And I hope everyone has a safe and Happy Christmas, and we all have a much better 2021.

Peter Taffe