A new year is symbolic of a new beginning – something many of us will be looking forward to after 2020. In fact, the start of 2021 is a great opportunity to change your money habits, set financial goals and make workable plans to achieve them.
Here are a few ideas to get you started and make 2021 your best money year yet.
Review past plans and performance
Some people start every new year determined to become regular gym-goers. Others, begin by promising themselves that they’ll be better with money this year.
If you’ve tried to work to a budget in the past but found it difficult, it’s worth reviewing your plan and understanding why it didn’t work out. By looking at what didn’t work last time, you’ll be in a better position to understand what you should do differently this time.
Consider your priorities
Before you set any forward-looking budgeting goals, it’s a good idea to consider what’s really important to you when it comes to money.
For some, money is all about having security no matter what happens. For others, it’s about freedom and the chance to live life on their own terms. Some want to have something to pass on to kids and money in the bank for a comfortable retirement.
What’s your priority when it comes to money? Taking some time to think about that question will help you understand your personal priorities and set goals that are meaningful to you.
Setting achievable goals
Now that you’ve thought about what you want from your money it’s time to set achievable goals to pave the way. You might have short term (under two years), mid-term (two-five years) and long term goals (more than five years). For example, these could be:
- Short term: reduce spending or save up for a trip.
- Mid term: save a house deposit or get out of debt.
- Long term: save for retirement.
Its recommended to be as specific as possible when it comes to setting budgeting goals, so try to put a specific dollar value on each of them.
Once you’ve set some budgeting goals you need to take action to achieve them. In most cases that will simply require:
- Assessing your current financial situation.
- Making a plan to move from where you are now toward your goal.
- Then putting that plan into action.
If you’re aiming to save a house deposit for example, your plan may be to save a certain amount a month. Your plan could involve automatically transferring that amount into a savings account on payday, and reducing your spending to make that possible.
Our 7 simple steps to budgeting successfully can help you manage your money and ensure you continue moving forward towards your goal.
Consider reducing debt
With careful planning and building of solid habits, you may be able to reduce financial stress and start to feel more financially secure in 2021.
Paying off debt is often the first step on the road. Settling credit cards and other high interest debt could eventually free up money in your budget to make reaching your goals easier.
The next step might be to save a rainy-day fund. Conventional wisdom says that it’s a good idea to have between three and six months of living costs saved up to make sure you’re always financially secure no matter what happens.
If you need help getting your debt under control in 2021 and beyond a low interest personal loan could be a good way to start. These loans often allow you to consolidate all your debts which means:
- One regular repayment instead of several.
- A lower interest rate than most credit cards.
- Flexible repayment terms to help you get on top of your debt.
Published January 2021