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.
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?