As the new year begins, it’s difficult to know what kind of financial and investing challenges await us. All indications are that we will continue to live with the effects of the pandemic for some time, but those effects may not be straightforward. Last year, the markets showed themselves to be surprisingly resilient while the “real” economy and job market faced substantial headwinds.

The way forward? Build financial resilience into your household balance sheet while maintaining your commitment to your long-term investing goals.

Assess your liabilities

A good place to start is to make a realistic assessment of how secure your income is that supports your family and household. Many of us live in two-income families. Are both incomes secure for the foreseeable future? If not, it makes sense to examine how to best get by without the income you are most worried about.

Have you reassessed your household budget or spending since the pandemic? You may be surprised at how it has changed. In 2020 we spent a lot less on travel and events, and a lot more on groceries, deliveries and in-house entertainment. Some “discretionary” spending like streaming services may seem more necessary during lockdowns and restrictions. Even if you don’t keep a formal household budget, ask yourself where you would cut back if 2021 looks a lot like 2020.

If you are counting on available credit options like credit cards or a Home Equity Lines of Credit (HELOC) to see you through any difficulties, think carefully. While credit can be a useful financial tool, building up unnecessary debt can be toxic to your long-term financial goals. And, keep in mind that many credit arrangements like HELOCs can be lowered or ended by the lending institution at their discretion.

Assess your assets

The wisdom of an emergency fund to cover short-term financial bumps was really brought into focus when the pandemic hit. If you don’t have one and your income is secure, it’s a great time to establish yours. Aim to cover your essential expenses for about three months.

If you have been putting off contributing to your long-term investing goals, reconsider the wisdom of that strategy. By growing our wealth when we can, we are also building resilience into our overall economic situation. An assessment of your net worth can give you a comprehensive picture of where you stand.

Next steps: If short-term financial resilience is a key goal, let’s make sure it’s part of your investing strategy. And, let’s assess where you are in meeting your long-term goals. An investment strategy review can help with both.