If saving more is among the resolutions of the new year, our personal finance experts leave you with some suggestions to start acting and increase your savings.
With the year 2021 approaching, it’s time for balance sheets on what’s past, and resolutions for the year that begins. In an atypical year marked by a Covid 19 pandemic that has spread to the four corners of the world, taking learning from the moment is fundamental.
When we look at personal finances the biggest learning we can take away is even the importance of having a good emergency fund, that is, a sock foot for unforeseen events and that gives us some peace of mind in the face of unexpected adversities, as was the case.
We don’t know what 2021 has in store for us, but with the arrival of vaccines a new door of hope for an improvement in economic conditions is opening. To prepare for next year, it is also essential to strengthen our savings capacity, so I leave you some suggestions to start saving in the new year, or even strengthen savings. You don’t have to implement them all, you can choose the tips that make sense in your case.
7 Tips to Help Your Finances in 2021
Make a budget.
This is perhaps the most repeated tip and also the one that fewer people implement, but it is fundamental to identify your financial situation and help in defining objectives. The budget allows you to know where your money comes from and where it goes. This “photo” will give you the answers you need to know what expenses are hidden, what expenses you can cut, what you can reduce, and after all how much you will save.
So we leave you the challenge for 2021: for at least three months monitor all your expenses. Even if you don’t do it anymore, you already have a basis for calculations (use the average of those three months).
Set goals.
Every year we mentally make some resolutions – “this year I’m going to the gym”, “this year I’m going to read 50 books”, etc. – but then we don’t set concrete goals for our personal finances.
Define how much you want to save, for which goals and where you will invest. If you feel that in this last point you don’t have the necessary knowledge, try to inform yourself more or even include a training in the resolutions of the new year to increase your financial literacy.
There are have several pieces of training and actions happening throughout the year that can serve to increase your financial literacy, or you can also listen to the MoneyBar podcast.
Pay yourself first.
If you wait for the end of the month there may not be any money left. So, as soon as you get paid, put aside an amount for savings. This way even if you spend the rest of the money afterward, at least the savings are already assured.
Save at least 10%.
How much should I save per month? This is a very frequent question to which there is no single answer. In fact, the more the better. Still, good practices in personal finance management recommend that at least 10% of your monthly income be saved.
If you can save more, the better. If you can save less, don’t worry. The important thing is to get started. Even one euro a day.
Reinforce the emergency fund.
This is the first level of saving. Your first objective should be to create an emergency fund equivalent to six to 12 months of your monthly expenses. The objective is to ensure that in the event of an unforeseen situation, no financial disruption occurs.
Challenge of the 52 Weeks.
A few years ago I shared this challenge and I never thought this challenge would become so popular. Basically, it is a methodology, in the form of a savings game, in which one saves the equivalent of the weeks of a year. 52 weeks ago and for each week you save the equivalent of that week in euros.
Thus, in the 1st week you save 1 euro, in the 2nd week you save 2 euros, and so on until the 52nd week in which, in that week, you save 52 euros. All added up, and by the end of the year, you will have put aside 1,378 euros.
Method of envelopes.
This is a practice that is still used by many older people. In practice, it is a matter of dividing the money for each of the expenses by several envelopes.
For example, in the case of supermarket expenses, you can divide it into weekly envelopes. This way, you will have to better control the expenses related to this category.
These are some suggestions to better prepare your personal finances for the new year. Take advantage of the tips and start saving 2021!