New Year, New You: Getting into Financial Shape in 2021
If you’re anything like me, you’re ready for 2021. The excitement of a fresh start seems to hit a little differently this year. As you begin to identify your resolutions and make plans for the coming months, I would encourage you to set aside some time to evaluate your finances and focus on creating a few answers directed toward your financial habits and well-being.
If 2020 stirred some emotions of financial apathy, then it's time to direct your thoughts toward a robust, focused, and more financially independent future.
Below are Five Simple Steps to Set a Foundation for Financial Success:
1. Start over if you need to.
Many of us have had a rough 2020, so 2021 might be about rebuilding. It’s a wonderful time to focus on prioritizing savings and re-establishing your credit. Start slow, and remember not to bite off more than you can chew. It may be helpful to start by having a goal of six months’ worth of net income in the bank and making sure your payments are on-time, which can be helpful when it comes to rebuilding your credit.
2. Share your goals.
Sharing your financial goals with friends, strangers, or social media can help you articulate your top priorities and hold you accountable. If its money, health, or career-related studies suggest that making public statements help people maintain a more substantial commitment to them.
3. Work toward eliminating debt.
Don’t be afraid to open your bank statements because you dread the holiday shopping hangover. Ensure your checking accounts and credit cards are in line by keeping an eye out for proper return credits and false charges. Figure out how much you can afford to pay off each month and post it somewhere you’ll see it every day, like your bedroom, bathroom, or closet. Having a constant reminder of your goal will help you make progress.
4. Check your credit score and report.
At a minimum, you should be checking your credit report every 12 months – it's free and an integral part of staying on top of your finances. There are a few ways to check your credit score for free (check out AnnualCreditReport.com), and there are even banks and credit cards that offer a free copy of your FICO score with each statement.
Revisit your budget.
A budget is a realistic roadmap to help you accomplish your financial goals, and it doesn’t have to be complicated or expensive to be effective. If you don’t already, get in the habit of entering your expenses into a spreadsheet or notebook, use an app, or use your monthly bank statements. If you already have an established budget, set aside some time to review it and make any changes for the upcoming year.
The best things in life aren’t free, but it’s easier to enjoy them when you have a strong financial system in place. When the calendar changes to 2021, you’ll be prepared for the year ahead and already in the mindset for financial success.
Have questions about creating a stronger financial future? Please feel free to reach out!