So, how do we make 2021 better than 2020. Well, it shouldn’t be too hard, should it? Here are some things that you should do that could have a very positive impact on your new year.
1) Make An Efficient Budget
If you do not already have one, making a budget should be your first priority in the new year. If you do not have a budget, you have no way of telling where your money goes. If you do not know where it is going, you can not find a way to manage your money more efficiently.
A budget does not have to be fancy, it just needs to be a representation of where you are spending your money. Make sure that it includes every monthly expense and include allotments for regular expenses like food, gas and entertainment. You need to account for every single dollar and budget some money for savings.
Once you have that budget, it is time to make it more efficient. If you are like most Americans, you lost some of your savings or income in 2020. Make some changes to account for this. Changes could be small or they could be very big. It just depends on how much your income or savings was affected in 2020.
Small changes are easy. Shop around for cheaper car insurance, stop going out to dinner as much or simply start meal planning to cut your food costs.
If you need to make some big reductions, you may have your work cut out for you. This might involve moving to a cheaper home, trading down to a less expensive vehicle or eliminating all outside dining expenses.
2) Start Saving
So you have lost income and I am telling you to save. Sound impossible? Well, you need to find a way. That is where the step above comes into play. You need to make your budget efficient based on your current or expected income in 2020.
As bad as things are, they could always get worse before they get better. What would happen if you had to take a pay cut or even worse, lost your job entirely. Find a way to save even if that means slashing your budget to the bone or taking on some side work.
If you are starting a new savings account, open one up with a bank apart from your normal checking account. You do not want the accounts directly linked as this would make it to easy to get. A better option is an online savings account. With an online account, the money would still be accessible but it would take one business day to transfer, giving you time to cool off. They usually pay better interest as well.
Ideally, you should be saving 10 percent of your take home pay, but it is okay to start slow. Start by saving 50 dollars out of each check and then gradually increase the amount until you reach at least 10 percent of your net pay.
3) Add Extra Income
In 2021, you should do your best to take back the income that you lost and this might mean picking up a side gig. There will always be opportunities to make extra income, even in a down economy. This is largely due to the fact that there will always be jobs that people do not like to do. You need money, so you may need to just suck it up and work one.
Some examples of these jobs are filling orders in a warehouse, working fast food, stocking retail shelves and similar manual labor type jobs. No, these jobs are not typically fun but they usually have flexible hours and start at 13 to 15 dollars an hour. They are worth doing for the extra security that additional income provides.
If you are truly ambitious, you can even consider starting your own business on the side. There are many businesses that you can start with just a few hundred dollars like carpet cleaning, maid services, lawn care or even a poop scooping service. Once again, these are jobs that nobody wants to do so they will always pay somebody else to do it.
4) Set A Goal
You need to have a goal in order to stay motivated. Make 2021 a better year by setting a clear goal and then work towards it.
Some examples of goals could be saving 2000 dollars, paying off 3500 dollars in credit card debt or getting rid of that student loan debt.
Whatever the case, make the goal clear and track your progress. At regular intervals examine where you are in the process and make changes to your finances if needed. To stay motivated, go as far as making charts and graphs showing how far you have come.
5) Change The Way You Spend
For most of us, the times have changed dramatically and we can not be the consumers that we once were. It is time to be frugal, some would say even cheap. Living frugal means being a different kind of consumer.
One thing that will be different is that you can not just buy something when the urge strikes you. Gone are the days of picking up a new apple watch each time a new model is released. Set a cooling off period of 2 to 4 weeks for major purchases. This will give you time to cool off and will probably result in you losing your desire to make a purchase.
Also, you should always be looking for the deal. Take the time to thoroughly research each purchase that you make. Take advantage of apps like Honey or Ibotta so that you never leave any money on the table.
Finally, make what you have last longer. Instead of trading in your car every 3 years, keep yours a few years more. Modern cars are more reliable than ever, so take advantage of this. Do the same with everything in your house from appliances to electronics to clothing. Keep it longer and stop throwing money away.