With 2020 behind us, we’re all due for some good luck in the New Year! Times have been tough, but rather than simply hoping for the best, we need to map out a practical game plan to keep our finances in order for whatever comes next, good or bad.
We’re here to give you some tangible tips that will help organize your personal finances, prepare you for uncertainty, and ensure that you stay two steps ahead of any stressful scenario.
1. Look at How You Spend
If you look at what you spent in 2020, you may be pleasantly surprised with what you were able to save. Considering that most of us weren’t going to restaurants, concerts, or vacation destinations, most of our disposable income likely went to comfort items and at-home entertainment.
Regardless, this is your chance to analyze your spending habits of the past year and look at areas for improvement and increased savings the next time around. Maybe you can cut back on take-out dinners, or remove one of the digital subscription services you don’t use often. For essentials like personal care, there are many ways to save.
“A savvy way to get the biggest bang for your buck with self-care services is to buy a pass or any sort of package deal,” said Benjamin Smith, Founder and CEO of Disco. “When you buy services in bulk the cost is usually shaved down tremendously. depending on the vendor, you can get monthly or annual memberships that are more economic than individual purchases. They might allow you to buy a fixed set of services at a reduced rate. Either way, this is a nifty hack for saving on your personal care.”
Taking just one hour to look over your bank statement can reveal a lot about your habits and purchase patterns, so use it as a learning opportunity and don’t beat yourself up. What’s done is done, and now you have a goal to work towards in the new year.
2. Find Ways to Increase Income
There are so many ways to boost your income in the internet age, with limitless resources available online to teach you about money-making strategies at no cost.
You can tutor students over video chat, set up a digital content channel, start writing eBooks for Amazon, build out a dividend account, invest in real estate properties, run some deliveries in your city, or do some freelancing gigs to strengthen your portfolio.
With an unpredictable economic forecast, it’s not a bad idea to bring in some extra income, even if you have a stable job at the moment.
“Be mindful of the obstacles that will be present this upcoming year,” said Jason Wong, Founder of Doe Lashes. “However, amid uncertainty and chaos comes new doors to knock on and new opportunities. Always be prepared to take on new challenges and do the best job that you can do. Be ready for highs and lows but most importantly, be ready to show what you are capable of.”
If you don’t have a skill you can monetize presently, start researching now and we guarantee there’s something that fits your natural capabilities.
Even if it doesn’t make you rich quick, those extra skills could pay off in a big way down the line – plus it’s a productive way to spend free time if you’re stuck at home.
3. Study and Expand Your Knowledge
Even top schools don’t teach much in the way of personal finance, and while some companies are beginning to offer financial education programs to employees, most of us are still on our own.
The answer is self-study, and just a few minutes of reading a day can help you make sense of this complex topic.
“I am concerned that too many people are focused too much on money and not on their greatest wealth, which is their education,” said Personal Finance Expert and Author Robert Kiyosaki. “If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes.”
Take this year to learn as much as you can about saving, budgeting, and everything in between. The more exposure and familiarity you have with concepts and terms, the easier things will be to navigate when challenges appear in your own life.
4. A Roadmap to Long-Term Stability
Ask 100 people about their No.1 financial goal and they will likely have a similar answer: stability and certainty for the future. However, this broad goal needs to be broken down into manageable, practical steps if any progress is to be made.
“Without financial goals, it is easy to remain in the paycheck-to-paycheck state,” said Roy Ferman, CEO and Board Chairman for Seek Capital. “When you set a goal for your finances, you will have a standard to uphold that allows you to realistically plan and track your progress.”
Whether it’s paying off consumer credit cards, cutting out that daily latte, or automating small index fund investments each month, every mini-goal serves its purpose, and the sooner you get started, the better.
5. Finally Tackle Your Debt
The majority of Americans have some form of debt hanging overhead, so you aren’t alone in the struggle. In fact, it’s perfectly normal. What matters is how you address the debt and whether you have a plan in place to chip away at it over time.
Many financial experts say that paying down debt should be your top priority, so don’t get in over your head by doing too much at once.
“The best way to stick to any goal you set, financial or not, is to allow yourself room to learn, grow, and make changes where needed,” said Jing Gao, Founder and CEO of Fly By Jing. “If you set tons of goals right off the bat, the likelihood of you sticking with them decreases significantly. So, take it slow. Inform yourself of all your finances throughout a typical year, set goals within your means, and don’t be hard on yourself if you slip up occasionally.”
Trust us – once you have an actionable strategy to conquer your debt, you will feel a huge weight lifted and a renewed sense of confidence in your financial wellbeing.
6. Be Diligent About Taxes
2021 will be a complicated year for everyone in terms of taxes, so research as much as you can to avoid running into penalties and be sure to keep some cash on hand to fill any gaps you miss.
Since so many people filed for unemployment benefits this year, things are a bit different, but taxes must be paid regardless.
Spend some extra time this year reviewing your paperwork, following online tutorials, or subscribing to digital tax software that will make your life that much easier. It’s not fun, but these skills will help you save money and prevent future headaches.
Hopefully, next year our taxes will be way more straightforward.
7. Automate Your Savings and Investments
Make 2021 the year you finally set cash aside for a rainy day, since the past 12 months taught us that anything can happen in the blink of an eye.
This is the time to open a brand-new savings account and make a commitment to monthly contributions that your future self will be thrilled about!
“If 2020 was a challenging year financially, don’t give up hope,” said Dr. Robert Applebaum of Applebaum MD. “If you had to dig into your savings accounts, 2021 can be a year of rebuilding your financial cushion. If you need ways to boost your savings account, try and set up automatic payments from your checking account to your savings account or use an app that automatically transfers funds weekly on your behalf.”
Online banking makes these processes so simple, it’s impossible to get confused. Besides, automation takes away the pain of making manual transfers each month. Set it, forget it, and be grateful when you have that extra cash down the road.
8. Don’t Hesitate to Reach Out
Finances are very personal and have a big emotional component, making it tough to talk about with others. But just like other sensitive aspects of life like relationships and health, we sometimes need to reach out to others for advice or a second or third opinion.
“Ask for help,” said Alex Keyan, Founder and CEO of goPure Beauty. “Time and time again, research shows that establishing a structure of support helps to accomplish objectives. Surround yourself with individuals you know will promote your financial priorities and want to see you succeed.”
It always helps to talk things out with someone who knows their stuff, so be open to conversation and never stop learning.
SUBSCRIBE FOR MORE! HERE'S WHY:
1. You get 7 free books
2. You get the best money & productivity articles
3. You get the latest updates - all in one email per week