Now that we’re a short way into 2021, your new year’s resolutions will be well underway. But if you are still wondering whether it is you can do to make this year better than last year, and the year before, we have a suggestion; re-evaluate your finances. No one ever said that good resolutions could only be made to start on January 1, so now is a great time – as is any time – to start looking more closely at your money situation, and, whether it’s good or bad, making some changes to ensure it becomes better. When it comes to financial resolutions, there really is no time like the present; read on to find out more about how to make a start and the kinds of things you should be thinking about.
Review Your Money Goals
No matter what your money goals might be, whether you want to save as much as possible, save for a specific item or event, pay off debts more quickly, or make your day to day living more comfortable, it’s important to review them once in a while, and making this a regular thing – perhaps every quarter or every six months – means that you’ll always be able to see where you are and which goals you have reached.
If when you check your savings out and compare them to where you should be with your money goals you haven’t managed to reach the level you thought you would, you’ll need to investigate why this is. Not getting where you intended to be isn’t a problem as long as you can work out why and put yourself on the right track once more. This is why a money review is so important; you might think you’re doing fine when in fact there is an issue that, if you only know about it, you can solve.
Create An Emergency Fund
If 2020 has taught us anything, it’s that we never know what’s around the corner, and even if we think we’re on an even path towards wherever it is we’re heading, something could come along at any time and change our course – and our finances. An accident leading to time off work, an unexpected expense, even a global pandemic, plus much more besides, can all create an uncomfortable position to be in if you have no emergency fund to fall back on. Even if you have insurance that will cover the shortfall, it could take some time before this is paid out, and in the meantime, you might be forced to borrow money or even try to manage without.
If you create an emergency fund as soon as possible, you can start putting money into it. Try to put the same amount in each month, ideally on an automated payment, and make this a priority. If something were to go wrong, at least you would have this money to use while you decide what your next steps are. Even if you never use the money, knowing that you have a fund like this will allow you to relax a little more.
Increase Your Income
Increasing your income might be easier said than done, especially when jobs are potentially scarce, but if you want to boost your finances and be in a better position by this time next year, increasing your income is the best way to do it.
The most obvious way of doing this would be to get a new job that pays more than the one you’re working in now. If this is the route you want to go down, start looking around now to see what you could do. If you want to stay in the same industry, what experience and qualifications are required to get the salary you want? Make sure your resume is up to date to give you the best chance of securing an interview at least.
Alternatively, you might consider opening your own business. Starting this as a ‘side hustle’ means that you don’t have to quit your current job and lose any money, and any extra you make through your new venture can be added to your income. Remember, though, you’ll need to pay taxes on both incomes, so take this into account when you’re calculating your finances.
Take Your Time
Are you guilty of impulse buying? Most people are. We’ll see something that catches our attention, and because it’s right there in front of us, or it’s only a click away, we buy it without taking the time to think things through.
You might not think this is too much of an issue, but if you were to go through your bank statement now and add up all the money you spent on these impulse buys, you would probably be shocked by the result.
From now on make one of your financial resolutions to take your time. Don’t buy anything at first glance, and always check out reviews and testimonials before many any purchase. That’s if you even need the item in the first place because on many occasions you really won’t. Something that’s ‘nice to have’ is not the same as an essential, so again, take your time; leave the item where it is and take 24 to 48 hours to consider the purchase. If you still feel you want to buy it after that, and you can afford to, go ahead. But you might find that you no longer have the initial desire for it.
Another thing to bear in mind is sale items. Although they might look like great bargains and you might be tempted to buy them simply because of the price, not all sales are as good as they seem. Here is another chance to take your time over a purchase; use the percent difference calculator and you can see whether or not the money you’re paying is a fair amount and worth the cost.
Check Your Credit Score
Having a good credit score means that you can get much more competitive financing when it comes to loans, credit cards, and even larger items such as mortgages. A good credit score can be used to assess your credibility as a tenant too, so it pays to keep it at a healthy level where you can.
To start off your financial resolutions, check your credit score. See if it’s at a good level or not and if not check your report to find out what is pulling your score down. Several online services will allow you to do this for free. If you can see a problem (and sometimes there are mistakes made that can have an impact) then you can work towards fixing the issue. Your credit score can go down due to late payments, too much credit, applying for a lot of credit at one time, and many other factors. If your score is low, look into ways to boost it over the next 12 months so that by this time next year, it’s all looking much more promising.
Automate Your Finances
You might pride yourself on having a great memory, and knowing when your bills are due, ensuring you pay them on time. However, even if you do have a great memory, and even if you do usually pay on time, anything can happen that would mean you aren’t able to – and you might even forget. If you were unwell, on vacation, studying for an exam, or any number of other things were occupying your mind, would you still remember to make the effort to pay your bills?
The problem is that if you don’t do it, your credit score can be affected, not to mention the additional charges that will be added to your account. This is why it’s a good idea to automate your finances. Setting up advance payments for your bills means that they’re covered even if you’re unable to make the payment on time yourself for any reason. You can protect your credit score and reduce the chances of having to pay extra penalty fees.