The new year has begun and many of us our looking for ways to be better with our finances throughout 2021. If you have been following the blog, I posted in October about living within your means and paying off debt, you can check it out here. If you’re like me, you might still be looking for more ways to improve your budget! Here are 5 tips you can implement throughout 2021.
1. The 80/20 Rule
If this rule is new to you, it is the rule of living off of 80% of your income. What do you do with the other 20%? You invest 10% and give 10%. This does not mean just for the people sitting in churches wanting to “tithe their 10%”. Giving 10% to your favorite nonprofit organization will not only give you a boost of good cheer but it may give you a tax deduction option at the end of the year. If you’re looking for places to invest, check out this post about a 2021 stock forecast.
2. Consider Using Cash
In this post Covid world, cash can be a touchy subject. There is no doubt though cash still serves a valuable purpose in our society. One of those is helping us stay on task financially. If we are using cash, it’s a lot harder to go overboard! We can’t rely on our credit or debit card’s overdraft protection. When it’s gone, it’s gone. You don’t have to go all cash either, although that is an option many still find helpful. Check out this website if you want to learn more about using cash.
3. Plan a Vacation
You might say, “What? How is this part of a budget?” Listen, when it comes to working, we should work to live not the other way around. For many Americans, this is their reality though. They don’t spend much time with their family doing anything but the mundane. If, however you have a goal of something you want to do with your family, your work will have more purpose. Yep, Covid has made it more challenging and we don’t know what the future holds, but we can still plan for that time away. It will provide memories with our family or friends and recharge our batteries. It will also make us more productive at work!
4. Save For Tomorrow
What about that 10% in the first tip? If you don’t have three to six months worth of living expenses in a savings account, you really should consider putting a portion of that percentage toward that savings plan. We live in a crazy world. Even with insurance, an accident or illness can leave you out of a job and will thousands of dollars in bills. That savings will give you a cushion and buy you time to figure out what you will do long term for income, if need be. Some of us have lots of debt and the idea of saving is daunting, but it can and needs to happen if you’re going to financially stable. If anything, 2020 taught us how much life can change globally in a very short period of time. Don’t assume you will have tomorrow to start saving, save today.
5. Save For Retirement
Lastly, let’s look toward retirement. Social Security has had issues now for decades. Do you want to just assume it will be there when it is your turn to stop working? Do you want to have an inheritance for your children? With these considerations, it is important to put away for retirement. This is not your savings account, though it will come in handy too. You can choose to use Roth IRAs or even stocks to invest into your retirement. Check out this article if you want some tips on where to start when it comes to saving for retirement.
Conclusion
Last year, 2020, gave us all a run for our money. We saw challenges we never dreamed we would. Heading into 2021 we can choose to use our budget to give us the best shot at being financially stable. It will most likely take discipline and hard choices along the way, but if we stick to it we will see the fruit of our efforts down the road.
What is your biggest financial goal for 2021?
The second Tip is so important if someone is to save his or her fund, you can just go out everyday with your card because you will over-spend, also one need to plan about the future, you can’t spend all you have in a day , we should try and save part of our money for future purpose.
Love these tips! I have been tentative of late to invest beyond IRA contribution limits, and glad to see holding on to some cash is a good idea right now. I think I’m on the right track!
My biggest financial goal for 2021 is to get to the stage where I’m financially free. As a freelancer I always feel like my money is up and down. I’m working on it though. Thanks for the tips. Katie
Hi Jacque,
You covered all important points in brief. Saving are very important. You never know what kind of crisis is coming on the way. Using cash will save a lot of money, by using credit card we land up buying more stuffs than our requirements. 2020 taught us a lot.
Thanks for sharing it.
I Had not Read your Previous October Month Blog. But by reading this Blog, I also feel like life is unpredictable, so ups and downs are also possible in 2021. If you not financially stable, don’t buy high-budget things. But the Tip provided in your Blog is helpful for someone.
These are some of the great tips to look forward to in 2021 as it is the start of the year. Also, a person like me who does not have a fixed income, how do you suggest we make our budget plans?
Hi Raj,
I would suggest trying to estimate your minimum needs and your minimum income if possible. If you can budget your absolute needs, you can see better what you need to do to make that amount happen. You might have to get creative depending on how your income source is, but knowing your needs will give you a better vision.
Lovely writing and well said by Amodini (one of the comments up there). I would just like to add that one should keep 4 months’ worth of money at hand for running cost… rest should be invested for long-term, but only after you have life insurance and medical insurance covered. Insure yourself and your family first and then go for investment… that too loooong term… with goals set to the investment. For every life goal you have, one must invest and set a goal. Yes. 2020 taught us the significance of saving…
Hello Jacque,
Thanks for sharing the great article with us. It is really helpful for us to maintain the budget in 2021.Fantastic piece of Content! Really appreciate your time and efforts to create content like this.
The absolute best thing I’ve done with my finances is creating and updating a budget. It encourages me to store things on track and prepare for the future.
Nice post! great content. My biggest goal in 2021 is to have my own building. All plans are in place to achieve this
Love your tips! saving for tomorrow is my favorite one. Everyone can do that by not buying high budget things.
I’m turning 30 next week and have actually been thinking about this for a while now. I have to become a bit more conscious of the fact that I have to prepare for my future. Not only for me but my family. Will definitely be following these tips!
Although all these tips will all work, but tip number 4 is the kind of me. for every income i earned, i always save portion for tomorrow. i dont follow 80/20 or 70/30 or whatever rule it is, as long as i keep some portion of my earnings for tomorrow, i feel security already. Overall plan for every expenses and make sure you dont overspend. Anyway thanks for these tips. Cheers and have a safe 2021.
I love the simplicity. A lot of times things are over-complicated, but by simply laying things out as they are, then it’s a lot easier to work into your planning. An emergency fund is definitely something everyone should be thinking about these days and also how you can possibly monetize your hobbies. Who doesn’t want to make money while having fun, am I right? 😉
These are all great tips. My family also does the 80/20 rule, but we have changed it to 75/25. The extra 5% goes into a savings account for a yearly vacation. We have two young daughters, so it really drives home the point that saving “pays off” for them. Plus, it shows that you can have short term savings for something like a vacation and long term savings for emergencies and more significant expenses. Anyway, Thank you for these tips! My wife and I love reading your blog. Chris Swain, Cincinnati Ohio
As a freelancer I always feel like my money is up and down. I’m working on it though. Thanks for the tips. Katie
Following simple and objective steps like these I just saved about 7000 BRL and stopped being a debtor. Very nice post, I wish financial education were more popular among brazilian teenage, we would avoid a bunch of headache.
I have lot’s of goals in 2021 and most of the importance of cash I like 2nd tip thanks for share.
Interesting. Love the 80/20 rule. Though hard to stand by consistently when you have dependents. Thanks for the article.
The The 80/20 Rule is the most important one.
Couldn’t agree more with #3! Sometimes it’s hard to spend the cash but some time off is great for mental health and a worthy investment
Following simple and objective steps like these I just saved about 7000 BRL and stopped being a debtor
In this digital era, always having cash in your hand is a good choice. Dont save all your money on digital wallet.
Hello
Thank you for your article… it is helpful.
I think the rule of 80/20 is the best one because you can apply it in all areas of life. it is very powerful.
The subsequent Tip is so significant on the off chance that somebody is to save their asset, you can simply go out regularly with your card since you will over-spend, likewise one need to design about the future, you can’t burn through all you have in a day , we should attempt to set aside part of our cash for future reason.
I am totally agree with the ideas of planning budgets, saving for tomorrow and for retirement. Your post is really inspiring and I must appreciate your skills in writing. Keep up the great effort to get more like this in future.
With Regards
The goal in life is to become financially free and independent, especially when you’re a young adult. Thanks for these tips. They are really helpful.
I love the 80/20 rule. So many people neglect giving but it is very important and great to budget for.