Here’s Your 2021 New Year’s Savings Plan
We’ve (finally!) turned the page on 2020, and now come the well-intentioned resolutions, the promises made and hopefully kept, the plans for more mindful living not just on January 1st but all year long.
Most likely, budgeting and savings will be at the top of many people’s lists, especially given the financial uncertainty that 2020 and the coronavirus pandemic brought to households big and small. But to put into action a money plan that works for your particular circumstances, you’ll need to review your past finances while also looking ahead. Here’s an easy and effective financial planning review to help you get started on savings resolutions that can yield real results. And it only takes about 15 minutes of your time!
A Five-Minute Review Can Help In A Number Of Ways
Take a broad look at 2020 and ask yourself if you met most, some, or none of your financial goals. If you fell short in money matters, try to determine why or when. Some factors may have been beyond your control, such as a reduction in work hours, a layoff, or a client’s reduced budget if you’re a gig worker or independent contractor.
But these types of difficult circumstances can serve as a blueprint for shoring up your savings in the coming year. Consider starting an emergency savings fund to cover unexpected income losses, increasing your availability for side gigs so that you can add to your cash reserves, and marketing your services more aggressively in order to obtain more clients.
But what if your income remained steady in 2020 but you still fell short of your financial goals? Do a quick assessment of where difficulties popped up: did you stop following your budget? Were your financial goals unrealistic? Did impulse-spending overtake saving? Did you simply forget to look into that investment account you were planning to open? By looking back at what happened in the past year, you can open up more possibilities in the months ahead.
Good Things Come In Threes: Take Three Minutes To Set New Money Resolutions
Your financial resolutions for 2021 should focus on your personalized goals — not those of your neighbors or new bestie, coworkers or cousins. Prioritize those things that matter most to you such as an emergency fund, IRA contributions, a college fund, a retirement nest egg, or a vacation reserve.
List your goals, then set reminders or calendar events that will help you track milestones throughout the year. Setting goals is the first step, but consistency can put you on the path to realizing those goals.
Two Minutes Can Get You To More Savings
We all know that cutting out nonessentials can help save money, but there are other, more creative savings strategies that can help you build up your cash reserves. Set a timer for two minutes and see just how many new money-savers you can think of, and consider adding some of these strategies to your list:
- Start cooking at home and spend less on eating out
- Buy generic products instead of higher-priced, brand-name grocery items, and take advantage of weekly grocery store sales
- Add to your savings by selling an unused furniture, clothes, books, or electronics you may have
- Bundle insurance policies to save money on your monthly premiums
- Have movie nights at home instead of paying for cinema tickets
- Consolidate your loans or credit card debt to reduce monthly interest
Give Yourself A High Five For Establishing A Budget
Set aside five minutes to jot down your monthly expenses along with their estimated costs. Consider items like prescriptions, car gas, utilities, groceries, insurance, rent or mortgage payments, and subscriptions and memberships. Look for any items you can cut out entirely (In the last year, have you worked out at the local gym or is your membership just weighing down your budget?).
Or perhaps you can just trim some of your budget-busters instead of totally eliminating them. By taking a look at your monthly expenses, you’ll gain an understanding of where your money went and how you can control where it’s going, in the year ahead.