5 ways to reset your financial clock in 2021
When it comes to finances, setting new year resolutions is easy, it’s seeing them through to the end that’s the hard part. Here are our five tips to achieve your saving goals in 2021.
With the new year already upon us, it’s an ideal time to consider what financial resolutions you can make for 2021 that will put you on the path to financial mastery. While sticking to new year resolutions can be tricky, here are five simple and easy saving ideas that will help set you up to achieve your financial goals in the coming year.
1. Get out of debt
Before you can bolster your savings, you first need to eliminate debt. Here, a good first step this new year is to formulate a repayment plan that, as a top priority, pays off your debt with the highest rate of interest first, or works to get rid of the most urgent debt.
Another option to consider is consolidating your debts. In simple terms, this means rolling your existing credit accounts into one loan. By doing this, you’re effectively taking several debts and turning them into one big debt, so you can better manage your repayments.
2. Update your financial goals
With the new year comes new financial goals. Take some time to get clear on your goals so you can build a savings plan that makes them a reality. For example, do you want to buy a home? Expand your share portfolio? Or start a business?
And remember, to boost your chances of reaching your financial goals, it helps to be specific around exactly what it is you want. Then that you can start to plan how to get there.
Here, it can help to divide your goals up into short- and long-term financial objectives. While short-term goals, like a minor home improvement or a new car, typically range up to a year, long-term goals can take five years or more and require a considered saving plan.
3. Re-examine your budget
Starting off the year with a fresh look at your budget is another easy resolution to complete. Simply re-look at your income and expenses to get an accurate picture of your present financial situation, then see what you can alter for the 12 months ahead.
For instance, consider your regular and discretionary expenses, or outgoings, for the year and see what you can cut, or reduce, moving ahead. You may find that you can boost your savings by decreasing spend on things like restaurants, clothes or holidays.
The new year is also be a great time to shop around for deals, with many sales and discounts on offer that can assist to lower your expenses. For example, if it’s time to renew your insurance, compare premiums with other providers online, or, if it’s time to pay an energy bill, look to see if competitors can beat your current provider on price.
4. Consider consolidating your super
Thinking about the long-term when it comes to your savings is also a good idea at the start of the year. On this front, consider whether consolidating super funds makes sense for you, as each fund has fixed costs. With just one fund, you will pay only a single set of fixed costs.
What’s more, consolidating super funds makes it much easier to track and manage your super because your money is all in one place, meaning less time and hassle for you.
Also, super fund performances differ markedly, so if you do decide to consolidate your super make sure to do your research and check the insurance cover that is provided as well as picking a solid performer. That way, you will maximise your retirement savings and be able to enjoy your later years with less financial stress.
5. Create an emergency fund
Lastly, good saving also means putting money away for an unforeseen situation where you need the ability to access funds fast. This is where an emergency fund is a prudent option.
Moving into 2021, consider how much money you’d need to deal with a financial crisis like a serious injury or a job loss, then save accordingly. Along with major issues, an emergency fund can also help with minor shocks like medical expenses or heating bills.