Financial Planning

6 financial planning lessons to learn from 2020

6 financial planning lessons to learn from 2020

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult an independent financial adviser.

2020 saw many households’ finances destabilised as businesses closed, self-employed people lost work and jobs were shed. Whilst much of the damage cannot be undone, there are at least some lessons that we can carry into 2021. Some of these are non-financial – such as checking on your neighbours – whilst many of them concern our family wealth. 

In this article, our team offers six financial lessons which 2020 brought to the fore. We hope you find this content helpful. Please contact our team here at Cedar House for more information or to access personalised financial advice:

020 8366 4400 or


#1 Prepare for emergencies

Financial planners often recommend saving 3-6 months’ living expenses in an easy-access emergency fund – just in case. You never know when disaster might strike such as a lost job or an unexpected huge bill (e.g. a broken boiler). Yet, in light of the pandemic, many people are thinking that they may need to set more aside. After all, in just a few months the UK will reach its first anniversary of its maiden lockdown; a 12-month period staggered with restrictions.


#2 Debt is a chain around your neck

Even before the pandemic hit in 2020, over 50% of UK adults held personal debts exceeding £100,000 – with almost 5m owing over £10k in credit and loans. The monthly repayments from these debts can be crushing, especially during a lockdown when your finances may already be under strain. Make 2021 the year when you make a huge dent in your debts – or eradicate them completely. This will free up more income for saving and investing in your future.


#3 Don’t sell investments out of panic

Whilst some people can stomach the impact of market volatility on the value of their portfolio, most investors will feel at least slightly uncomfortable. During a “crash”, some will even panic as they watch their equities tumble – selling them frantically to prevent further losses. However, this typically results in regret later as these equities eventually recover and surpass their previous value. Those who sold at the “bottom” of the market in March 2020, therefore, likely succeeded only in crystallising their losses. Be careful to keep a long-term view with your investments. If you are planning to draw down from your portfolio soon, then speak to your financial adviser about changing investment strategy (e.g. moving away from equities and into bonds or cash). Be careful not to pivot simply out of panic.


#4 Weigh illiquid investments carefully

One of the hardest-hit groups of people in 2020 is, arguably, Buy To Let landlords. Not only had they been facing tighter restrictions on their profits for years before the pandemic, but many also saw rents plummet during lockdown months. Many tenants simply refused to pay – resting in the knowledge that the government’s “eviction ban” protected them. 

As a result, many landlords are looking to eventually get out of the sector. Here at Cedar House, we believe property can be a great investment. Yet it does come with specific risks which should be carefully weighed beforehand. These include illiquidity risk (i.e. struggling to sell if the market is at a standstill) and tenant risk.


#5 Take advantage of remote working

Whilst many people have not enjoyed home working – missing the interaction and collaboration of an office environment – it has benefitted certain groups financially. For instance, office staff no longer need to commute to work, saving time on petrol, railways and takeaway coffee. This has helped to drive up the UK’s household savings ratio from 5% in February 2020 to nearly 30% at the pinnacle of the lockdown last year. The question is, what should you do with the money? As financial advisers, our instinct is to encourage you to save and invest at least some of it. Whilst we hope for the best, you never know what other challenges 2021 may yet throw at you.


#6 Don’t forget your retirement

Most people have, understandably, been focused on keeping their job and stabilising their short term finances in 2020. Yet, for some of us, this attention on the “here and now” has come at the expense of planning for the future. For instance, there is evidence that some workers reduced their pension contributions in 2020 to increase their take-home pay, and some opted out of their scheme altogether. Whilst there are situations where such action may be necessary, it is crucial to think hard and consider professional advice beforehand. Remember, your pension offers a range of benefits which are hard to replicate elsewhere, such as employer contributions (topping up a workplace pension) and tax relief – which can add 20-45% on your own contributions.



2021, hopefully, will bring better things for our social lives, household finances and the economy as a whole. Whatever transpires, however, make sure you move into months ahead armed with some wise lessons from the previous year. 

Interested in discussing your financial plan with an experienced financial adviser? Get in touch today to discuss your financial plan with a member of our team here at Cedar House via a free, no-commitment consultation:

020 8366 4400 or


Posted on
Posted in Financial Planning