If 2020 hasn’t exactly been kind to your finances, you might be looking for ways to turn them around in 2021. That means taking a new approach to managing your money, which could include setting new goals, creating a budget (and sticking to it) and saving for emergencies, among other things. Keep reading to learn the best financial advice you need to take into 2021.
1. Set New Goals
A new year means it’s time to set new goals. What are your new goals for 2021? Do you want to save up to buy a house? Start saving for retirement? Pay off student loan debt? Whatever your goals, write them down (be specific) and keep them in a place where you can periodically review them when necessary. Also, give yourself a deadline to achieve your goals.
2. Create a Budget and Stick to It
Creating a budget means calculating your income and creating a list of monthly expenses (both fixed and variable). Make sure to budget wisely and cut out things in it that aren’t completely necessary. Find ways to stay disciplined and don’t be afraid to reward yourself occasionally. You might consider using the 50/30/20 rule to make sure you consistently spend money, save money and invest/reduce debts.
3. Eliminate Your Debt & Save for Emergencies
Eliminating any debt you currently owe is one of the best things you can do for your finances, pandemic or no pandemic. The less money you have to pay monthly, the more you’ll have to put toward your goals. If you haven’t already, it’s time to start saving for emergencies. If 2020 taught us anything, it’s that having a savings account in a time of crisis can really be a lifesaver. Start saving at between five and 10 percent of your income for emergencies so that the next time a financial crisis occurs, you’ll be well prepared. The goal is to have at least three months’ worth of expenses in your emergency fund, but the more you have, the better off you’ll be.
A leading financial advisor based out of Singapore states that debt is one of the biggest enemies of making investments. In other words, you will never be able to plan your investments in the best possible fashion if you are under debt. This is why the first thing that you need to do is clear all your debts that eating into your future investment plans. This will help you create the right foundation on which to grow your savings and investment journey. People who are beginning out in the world of investing should not try to balance debt obligations with investment growth.
4. Reduce Your Tax Bill
One sure way to keep your finances on track is to find ways to reduce your tax bill. You can do that by putting more money towards retirement, contributing to someone’s future education (like a 529 college savings plan) or donating more money to charity. It’s best to seek out the advice of a financial advisor if you want to save the most money when tax time rolls around. Just know that there are a few ways you can reduce your tax bill fairly simply, depending on your tax bracket.
5. Protect Your Finances
Once you have your financial goals set and a plan in place to reach those goals, it’s time to think about protecting your finances because you don’t want all of that hard work to go to waste. Partnering with LifeLock can help ensure the progress you make toward achieving your financial goals won’t get interrupted by cyber theft. If you want complete protection and privacy, try Norton with LifeLock, which can offer identity theft protection, device security and a VPN from Norton that can give you absolute peace of mind.
Crushing Your Financial Goals in 2021
Now that you know what to do to crush your financial goals going into 2021, you can start taking action to ensure you meet them. That means setting new goals, creating a budget and sticking to it, eliminating your debt and saving for emergencies, reducing your tax bill and protecting your finances.