Take Control Of Your Finances In 2021
A brand new year often triggers a desire to make resolutions and set goals. If you’ve decided that 2021 is the year to take control of your finances, here are some steps to take today.
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Get to grips with your current situation
Some people will be able to tell you how much they have in their account down to the nearest cent, while others don’t have a clue how much money they’ve spent on a credit card, how much they’ve taken out in loans, or how much is sitting in their savings account. If you tend to ignore statements or text messages about your balance running low, or you haven’t checked your accounts for weeks, the best place to start is noting down all your balances.
Read your statements, check every account, and make sure that you know exactly where you are in terms of how much you’re bringing in and how much is going out of your accounts each month. Once you have a starting point, you can figure out realistic goals for the year ahead. If you’re in debt and owe money on credit cards or loans, it’s wise to reduce debts before adding to a savings account because you will incur charges through interest. Use Internet banking and apps to keep a close eye on your balance and track transactions.
Manage debts
Debt is a scary word, but it’s important to understand different types of debts. Many people are in debt due to taking out a loan or buying a house with the help of a mortgage, for example. If you have debts that are under control, and you’re able to keep up with repayments every month, this is very different from spending on credit cards or taking out short-term loans with high-interest rates from multiple lenders. If you are borrowing more money than you can afford to pay back or become increasingly reliant on credit cards, it’s crucial to manage your debts. Adding to your balances can cause debts to spiral very quickly, especially when interest fees are high.
It’s understandable to be worried or anxious if you feel like your financial situation is deteriorating rapidly. You’re at risk of receiving calls from creditors, but there is help available. If you reach a point where you can’t cover bills and you owe money you cannot pay back, seek expert advice.
There are measures and legal processes to help those who are struggling, and experienced advisers and lawyers can help you prepare for proceedings like filing for bankruptcy, navigate processes and start rebuilding after you finish paying off chapter 13 bankruptcy. The best thing to do if you are worried that you’ve lost control is to reach out as soon as possible. The sooner you start taking steps to prevent the situation from getting worse, the better. Working with experts can help you improve your finances and ease anxiety.
Budget
Budgeting is one of the simplest and most effective ways to seize control of your finances and start working towards savings targets. In this day and age, it’s so easy to lose sight of where your money goes when you tap a card to pay, you have direct debits going out of your account, or you buy items at the touch of a button via apps. Budgeting enables you to keep track of spending, analyze where your money goes, and set spending limits to save. To draw up a budget, you can use a pad and paper, a spreadsheet, or an app. All you have to do is note down your income, your regular outgoings, and any one-off expenses you expect to cover in the month ahead.
Once you have all the figures set out, you can work out how much disposable income you have, highlight expenses you can reduce or eliminate and set yourself a spending budget. Take time to look at the numbers closely and think about how much you really need to spend. For example, if you want to save more, you could look for ways to reduce spending by cutting out luxury items and non-essentials and trimming your budget for household expenses like groceries. If you normally go to the supermarket and spend $70 a week, for example, try and aim for $60 or $50 by sticking to a list, planning meals, and avoiding the temptation by steering clear of promotions and offers not relevant to you. Most of us are guilty of emerging with carts that contain products we buy just because they’re on offer.
Take Control Of Your Finances: Start Saving
Some people have specific targets in mind when it comes to saving, but even if you’re not putting money aside for a wedding, a downpayment on the house, or a new car, it’s beneficial to have a financial cushion. An SOS fund could come in handy if you lose your job, your workload is reduced, or you have to take time off due to illness or an accident, for example. It’s also useful to have access to money for unexpected costs such as home or car repairs, medical bills, or visits to a veterinary practice with your pet.
You don’t have to save hundreds of dollars per month to build a fund. Work out how much you could afford to save and set up a direct transfer to your savings account every month. Even if you can only spare $50, over time, your balance will steadily increase, and you’ll have a pot you can dip into if you need a bit of extra cash.
Resolutions are always a good idea if they’re going to make a positive difference to your health, mental wellbeing, and happiness in the year ahead. Money worries are common, especially in the current climate. Taking control of your finances is an excellent goal for 2021. Budgeting, keeping a close eye on your accounts and balances, managing debt, and seeking advice, and reducing spending can help you improve your financial situation and keep stress and anxiety at bay.
