The pandemic has been a dark and difficult time, but from this crisis has arisen the opportunity to develop wiser and more resilient financial strategies. These are the lessons I have learned; they are not intended as advice for others. Please take what is helpful and leave the rest.
1) Emergency Savings: No longer does three months of emergency savings seem even remotely sufficient. The pandemic has taught me that loss of income can come suddenly and last much longer than anticipated. I will always keep a minimum of six months of emergency savings going forward, with twelve months being my ideal goal. Maintaining these minimums should not be interest rate dependent.
2) The Semantic Range For Savings Extends Beyond, Savings, CD, and Interest Bearing Checking: With interest rates being close to zero, I took the opportunity to make major principal payments to my mortgage. If I were not otherwise debt free, I would have paid down my credit cards in order of descending interest. If one makes a 5K payment on a 7% interest credit card--it is just like earning 7% in savings. Debt reduction should therefore be included in the semantic range of savings--often a fine alternative to savings or CD once emergency savings is established.
3) The Value of Liquidity: While some will tie up money in a CD in order to earn 40 or 50 basis points more than a savings account, I find that such a paltry improvement is not worth the price of losing liquidity. For me, I would not consider tying up funds in a higher interest option, unless the CD was offering a minimum of 100 or 150 basis points higher than my savings account. Liquidity is precious.
4) Anxiety Makes for Poor Financial Decision Making: The financial and savings strategies I have developed during these pandemic times will not be changed by fear or anxiety. Certainly my plan will be intelligently adjusted as interest rates rise; but in no instance should fear, worry, and anxiety determine one's financial decisions. If one is anxious about their investments, perhaps they should adjust to lower risk options based on their risk tolerance.
These are four of the most helpful lessons I have learned during this pandemic time. I look forward to hearing from others.