It’s Been A Hard Year Financially. How Can I Be Hopeful About 2021?

Welcome to Taking Stock, a space where we can take a deep breath and try to figure out what the COVID-19 economy really means for our finances. Every month, personal finance expert Paco de Leon will answer your most difficult, emotionally charged questions about money. This year has forced many of us to reprioritise our finances, and there’s no clear road map for getting through the pandemic yet — but Taking Stock is here to help us figure it out together.
This week, we take an introspective look back on the whirlwind of uncertainty and hardship that 2020 has been — and what we can glean from these hardships for a more financially secure future.
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Dear Paco,
It's been a hell of a year. I've worried a lot about money and the economy this year, as a lot of people have. Now that it's December, what are the biggest lessons you have learned in 2020 as a financial expert, and what are the biggest lessons I should try to take to heart?
What should I be doing or thinking about right now to ensure I start off on the right foot financially for 2021? Can you share a positive story from your own experience that will give me hope things will be alright — and even better — next year?
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Dear Worried & Hopeful,
On the surface, the main personal finance lesson from this year is that each of us must find ways to insulate ourselves from individual financial shocks and general recessions. While we might not always know when exactly a downturn is coming or what will set it off, recent trends have shown that we can expect downturns to occur every 10 years or so. 
What does “proper” insulation look like? Ideally, it would mean saving a year’s worth of expenses (instead of six months’ worth) in an emergency fund. Commonly told advice to get to that level of savings includes: resisting corporate advertisements designed to get us to part with our hard-earned money, looking for a new full-time job, negotiating better pay at your current job, monetising a hobby, or getting a second or even third job. While this kind of advice is easier said than done, and isn’t desirable (or even possible) for everyone, it can still be useful as a guideline for pinpointing how you could better approach personal finance.
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But, the real lesson of 2020 is recognising that personal financial struggles cannot be seen in purely individual terms. In that sense, 2020 might be the year nobody wanted, but everyone needed. I don’t mean to sound flippant or insensitive to the reality of what COVID caused, from deaths to illness to economic devastation. What I mean, though, is that this crisis forced us to see common things in an uncommon way, and a new perspective can lead to new ideas. And new ideas are what precede concrete changes. 
This year showed us what happens when tens of millions of people lose their jobs and many others are forced to choose between earning money and risking their health. This is the year when we saw more clearly what the lack of a strong social safety net really does to a society. This is the year when we saw what happens when folks are evicted during a global pandemic. This is the year our healthcare system was stress-tested during a global health crisis. This year we had the opportunity to face the darkest corners of our history — and our present — despite how terrifying that may be. Through these realisations, we have had the opportunity to find out what’s needed for redemption. 
Despite how dire things may seem, I feel hopeful given the small changes I have witnessed. Throughout the year I’ve seen a change in the candour expressed by many financial experts. I’ve seen them struggle with having to reconcile the idea of personal responsibility in the face of a pandemic. Perspectives have shifted from the dogmatic, morally soaked views that hard work, hustle, and willpower are the harbingers of financial success, to acknowledging how factors like race and class inequality install barriers to supposed economic opportunity for all. 
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Even before the pandemic, these realities had reached a crisis point. Andrew Yang ran as a Democratic in the 2020 US presidential primaries on the platform that people deserve a universal basic income. As a primary candidate, Elizabeth Warren made the case for canceling student loans. Yang and Warren both ran on radical ideas, and while it’s unlikely that these progressive policies will be adopted in 2021, their introduction into the mainstream discourse is an important step toward a more equitable society. So as dire as the situation might feel right now, I do feel hopeful for the future. 
Let me be clear: Personal responsibility plays an important role in our lives. But it cannot account for the entirety of an outcome. In the same way that we have a personal responsibility to wear a mask and stay at home as much as we can right now, that alone isn’t an answer to successfully defeating this virus. Governments have to work in concert with public health organisations and private companies to develop a COVID-19 response program. Our individual efforts matter and it’s important to recognise that, but it’s not all that matters. 
That being said, I think one of the most important things you can do right now is to let the crisis reveal to you what you need to change in your life, financially and otherwise. This time is a gift and an opportunity to look at the places in your life where your actions aren’t in line with your values and to come up with ways you can change that. It’s a time to reflect and to let your feelings be sign posts that guide you. What is your financial worry a sign post for? Is it simply an indication that you need to take your financial life more seriously so you can feel better the next time there is an economic downturn? Do you need to find tools to help you distance yourself from identifying too deeply with your feelings of worry? Or, are those normal feelings in response to an overwhelming amount of uncertainty? 
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Each of us will experience more than one crisis in our lives. We’ll have to face death, disease, unemployment, war, civil unrest, climate change, divorce, the end of our working lives and the death of that identity, or all of the above. Since crisis is inevitable, ask yourself what is required of you so that you may become resilient? 
A pile of cash is a good start. But personally, I think that fully recognising the reality of life’s crises is a step towards becoming resilient. We can better prepare ourselves for future times of pain, worry, sorrow, sadness, and fear by allowing ourselves to feel those things now and realising that they’re a part of living. These are natural human emotions that our culture conditions us to ignore and avoid because they’re “negative.” When we choose to avoid facing up to our feelings, we become fragile, because how we expect the world to be doesn’t line up with how it really is.
I’ve been laid off on two separate occasions. The first time, I responded by convincing myself that becoming a lawyer would be noble, respected, and a way to never again feel financial insecurity. I bypassed dealing with my pain and rejection by throwing myself into the act of learning about law school and studying for the LSAT. In the end I’m grateful to have avoided that fate, but a couple of short years later I found myself getting laid off once again — facing the same emotions and being forced to learn a lesson I avoided learning the first time around.
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My approach the second time around was entirely different from the first. I did not take the kind of immediate action that would help me evade my feelings of rejection, of not feeling good enough, and feeling financially insecure. Instead, I allowed myself to remain in a state of tension, and I allowed this personal crisis to reveal what needed to be revealed. I let it become an opportunity to dream, to rethink my priorities and to find out where exactly my values and actions weren’t in line. 
Through this process, my feelings of insecurity helped me realise that I never wanted to be in a position where one person could take away my income. The risk tradeoff of working for myself was way more desirable for me than the risk of being laid off from another job that didn’t even pay that well. My feelings of not being good enough made me realise that I was constantly being underpaid, and the fastest way to break through this barrier would be to set my own damn rates. In retrospect, losing my job was one of the best opportunities I ever got. It showed me what I wanted to change in my life — and what my options were to make the change. It gave me a chance to work on becoming more resilient so that I could be more prepared, both financially and emotionally, for the next crisis I’d face.
Your financial friend,
Paco
What money-related epiphanies did you have in 2020? How do you feel about the state of your finances going into  2021? Tell us your thoughts here, and check back next week for a follow-up story on what R29 readers have experienced.
Do you have a question or dilemma you’d like to see answered as part of Taking Stock? Submit it here or send us an email at moneyquestions@refinery29.com.

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