6 Tips to get you there
The New Year has arrived, and if you're like most people, you’re probably wondering how you are going to keep your financial resolutions. Make 2021 the year you make financial fitness a top priority by following these six simple tips.
1. Create and use a monthly budget.
If you're not already making and using a monthly budget, this is the first habit you need to implement in 2021. Making a monthly budget not only helps prevent overspending, but it also keeps you aware of where your money is going.
You may be surprised to find, for example, that you are spending $400 a month on takeout. You can then lower your monthly takeout budget to $200 and find a more responsible way to allocate the extra funds. Without the help of a budget, you may never have realized you were overspending in this category.
2. Make sure you're still getting the best deals on insurance.
Review your home, auto, health, and life insurance policies to make sure the coverage you have still meets your needs. If something unfortunate happens and you don't have enough insurance, the results can be costly. Once you confirm the coverage you need, do a little comparison shopping between insurers to ensure you're not overpaying for that coverage.
3. Have a portion of your paycheck direct-deposited into your savings account.
Head down to your HR office and arrange to have a portion of your paycheck routed directly into a savings account where you won't be tempted to spend it. How much should you divert? Well, you'll need to reference your budget to make that determination. If you have $600 a paycheck in discretionary income after your bills are paid, a good starting point would be to save one third, or $200, of that amount. The savings can be used to build your emergency fund if you don't already have one, or to fund a vacation at the end of the year.
4. Cancel subscription services you no longer need or use.
Look over your bills for the past few months. Are you still using all of the subscription services you're paying for? If you're signed up for a streaming service, gym membership, or delivery service you're no longer using or enjoying, cancel it and save the cash instead.
5. Check your credit report.
If you want to maintain your financial fitness, you need to keep an eye on your credit report. Look over each entry. If any of them do not seem familiar, then contact the credit reporting agency and request that the entry be removed. False credit report entries are unfortunately common, and you do not want them to negatively impact your creditworthiness or credit score.
6. Increase your retirement savings.
Another good way to improve your financial fitness in 2021 is to increase your retirement savings. Find at least one thing you can trim out of your budget, and divert that money to retirement instead. For example, if you cancel a $50 gym membership, you can divert that extra $50 a month to retirement. If you notice you're spending $500 a month on takeout, you can cut that back to $250 and divert the remaining funds to retirement.
The year 2021 is sure to be unusual, but don't let that stop you from moving forward financially. Whether you apply one, two, or all of the financial fitness tips above, you'll end the year in better shape from a money standpoint.
Equal Housing Lender