Last year certainly turned out differently than anyone could have expected, with COVID-19 keeping people at home and loved ones apart. But as tough as 2020 was, it’s safe to say that many of us have learned a lot about ourselves and our communities.

Those lessons will stay with us for years to come. Some of us have learned how to appreciate a slower pace, enjoy time with close family, value the small businesses in our neighbourhoods and more. We may also have picked up some useful habits that, if we continue to follow them, could help us become more informed money-wise.

From saving to investing to paying down debt, here are five key financial lessons from 2020 that we should continue in 2021 and beyond.

Lesson #1: Help your savings grow

Many Canadians saved a lot more than usual in 2020, which is a good thing to a point. According to Statistics Canada, Canadians on the whole put away 28.2% of their after tax income in the second quarter of 2020 compared to 3.1% the previous year.1 However, those who have been storing that cash in their savings account may be missing an opportunity to grow their money. Why might that be a problem? Because, while our inflation rate is low, the cost of living continues to increase, making many things gradually more expensive every year: Our cash loses its spending power.2 As well, reaching your financial goals in life retirement, a child’s education or a home reno may require your savings to grow faster than they can in a low interest savings account. That’s why it can make sense to use the uninvested cash from your savings account to purchase investments such as mutual funds which could have higher growth potential.

Lesson #2: Stay invested for the long term

Some people learned this the hard way: When it comes to investing, staying focused on the long term could be the best way to reach your financial goals. In March 2020, at the beginning of the pandemic, markets nosedived, only to later rebound. Those who liquidated their portfolios when the markets decreased might have missed out on the subsequent gains. It’s natural to want to stop your investments from falling, but research has shown that it’s impossible to time the market.3 Markets will always go up and down. While sharp drops in your investments’ value may make you uncomfortable and test your discipline, keeping a long-term perspective allows you to ride out short-term turbulence with a more comfortable attitude.

Lesson #3: Match your investments to your financial goals

Part of investing means establishing your risk tolerance, in other words, selecting the kinds of investments that are appropriate for you and your financial goals based on your comfort level with risk. While cash is secure, its low-growth characteristics may not be enough to reach your end-goals. On the other hand, many people may dislike investments that rise and fall at extreme rates daily, even if they potentially offer better growth prospects. Finding an investment that you’re comfortable with that also makes your financial goals achievable is a central part of planning. Your time horizon or how soon you may need your money is another important consideration. For instance, if retirement is 30 years away, you may wish to invest in higher-growth (but also higher-risk) investments because of the long time horizon ahead of you. But, if you are a year from retirement (or indeed, retired), you may not want to put your retirement savings into an investment that is high-risk. The market downturn and recovery of 2020 taught many of us about the need for finding the balance between risk and reward, which can be different for everyone. Understanding risk tolerance isn’t easy, so talk to a financial advisor for help.

Lesson #4: Stay out of debt

The pandemic proved that anything can happen, which is why, as many people learned, it can pay to have your finances in order. The past year has taught us the importance of living within our means, the value of budgeting and that, for example, we may not need to shop for as much stuff as we thought. Many of us have come to see the impact that debt can have on our lives, especially high-interest rate credit card debt. An app like TD MySpend can help you keep track of your spending habits before they become a problem. If you are in an emergency situation and suddenly have trouble paying the bills, that kind of debt may be a hurdle to getting back on your feet. It would be a good idea to speak with a financial advisor to discuss what options you may have.

Lesson #5: Focus on what matters to you

With vaccines now being distributed, we all hope that life may return to some sort of normalcy in 2021. One of the main pandemic lessons we learned this year is that life is about the people and activities that make us happy. That’s why it can be important to have a financial goal working with a financial advisor can help you ensure your family is well taken care of so that you can do the things in life that put a smile on your face.