Michael D'Angelo- January 2021
2020 is a year most of us would prefer to forget. When the year started, nobody expected the COVID-19 pandemic or the economic hardships that followed. But with the first year of the new decade officially behind us, how can you better prepare your finances for whatever 2021 may bring? Our three suggestions are below:
#1: Establish an Emergency Fund
If 2020 taught us anything, it’s the importance of preparing for the unexpected. Establishing an emergency fund is crucial when it comes to being financially ready for medical emergencies, house repairs, car maintenance, etc.
Money tucked away in an emergency fund is meant to help cover the costs that are not part of your normal monthly expenses. Without an emergency fund, any unexpected event, could set you back significantly. While you may not be able to put the same amount away every month, every little bit helps, and it’s important to put aside what you can.
Here are some things you can do to help establish and continue to grow your emergency fund:
Create a Savings Habit
Try to be as consistent as possible when putting money away.
Try setting specific attainable saving goals.
Continue to always monitor your progress.
Once you reach goals, don’t forget to reward yourself!
Manage Your Cash Flow
Keep track of how and when money is coming in, as well as how much is going out.
Take Advantage of Any Additional Money Coming In
If you get a bonus at work or receive a monetary gift, consider putting the extra cash towards your emergency savings. Use these opportunities to get ahead or catch up!
Automate Your Savings
Establish automatic transfers through your bank, which will allow money to be directed to your savings account automatically each month.
#2: Save More Money
You’ve heard the phrase, “Every little bit counts,” all your life - but it couldn’t be more true. If you enjoy grabbing a coffee before work, start making a pot at home. If you go out to eat twice a week, cut down to once a week or every other week. Many of us are continuing to work from home, which cuts down on the need to buy as many clothes for work, which is another way to save.
While it’s an adjustment, these small “sacrifices” can yield significant results over time. Say you skip eating out one day a week, saving you around $20 on average. In the span of a year, that $20 becomes $1,040.
#3: Set Goals
Ask yourself what you want to accomplish in the months to come. Is there a certain amount you’d like to have tucked away in your savings? Or maybe you’re focused on getting a promotion at work? Whatever it may be, set a specific (and attainable) goal that you can focus on working towards in 2021.
In a world where we’re all recovering from economic and environmental hurdles, progress is worth celebrating - and worth pursuing.
We all are hoping for a better 2021, however, it’s always best to be prepared especially when it comes to your finances. These three tips should help with the transition into a new year. Hopefully, all of us can breathe a little easier, save for the future and have some fun!