Let’s face it, no matter how much we promise ourselves to not overspend, we eventually end up doing that. A few bucks here and a few there; it may not seem like overspending while at it, the final fat-bill often hurts. Not anymore. 2021 has arrived, and a fresh chance for you to get your finances on track.
Budgeting is the answer to your messed up finances. Here we share five tips to structure your finances smartly in the new year. Read on.
Evaluate your current expenses
If we ask how much you spend on entertainment & groceries per month, you’d most likely give us absolute numbers like $300 or $500. In reality, the numbers aren’t like that. Missing out a few dollars here and there will impact your financial planning.
Therefore, verify your expenses rather than guessing them. Go through your credit & bank account statements and factor in even your smallest expenditures. Use this data as a headstart to create and stick to your budget for 2021.
Create a saving plan for the year
The correct approach to achieving financial goals is to plan them. For example, you might be looking to save for your new home, car, or emergency funds worth three months of your expenses. Drafting an actionable savings-plan will help you to create and stick to your budget effectively. Firstly, it will give you an idea as to how much to save per month.
Secondly, you will know if you need to make any changes/adjustments in your spending pattern. For instance, if you aim to save $12000 in 2021, it means saving $1000 every month. But, if your current saving is around $700/month, you know you might need to adjust.
Factor in non-recurring expenses
Recurring bills like gas, flat rent, mortgages, groceries, etc, are important and help in a proper living. However, it’s the non-recurring expenses (say, a software renewal or annual insurance renewal) that dismantles an otherwise great budget. These are the expenses you need to watch out for. A smart thing to do is to include some extra amount in your savings (say $30/month) so that you can tackle any abrupt yet important expense out of the blue.
Choose a debt payoff plan
Aim to get rid of any & all the debts that you have in 2021.
You can pay off the small debts instantly using payday loans. Browse websites like Southern finance. They have an easy application process, a wide range of payday loans, and a quick money transfer process to your bank accounts.
For big debts like car or house loan, jot down all the important details like the monthly instalment, lender details, the interest rate, and the total outstanding amount. Then think about how you can pay them off. Starting by paying off the ones with high-interest will help you save on the interest amount or vice-versa.
Prioritize necessity, not luxury
This is an important habit you will need to develop in 2021. When you have a few thousand dollars in your saving bag a few months into 2021, you might be inclined towards luxury expenses.
For example, you may decide to buy Samsung’s latest flagship Galaxy, priced at $1200 from your savings if you’re a Smartphone freak. This will crumble your budget and leave you guilty later on. If your current phone is working fine, it’s advisable not to chase luxury to screw up your budget.
You work very hard to earn your paycheck. Spending your money on temporary fun or not auditing your expenses will keep you submerged in debts. Use the tips mentioned in this article to create a solid budget and stick to your budget for 2021 to keep you financially sound and confident.