When the pandemic hit in 2020, nearly half of American households experienced job losses or pay cuts. As they say, however, a new year = a new you. And one of your new year’s resolutions this year should definitely be to get your finances in check. Here are seven strategies to deploy in 2021 that can help you regain your financial fitness.
1. Start taking steps to raise your credit score
After a year like 2020, you may not be in the best financial shape. Many people made a dent in their savings or even turned to credit cards to afford their lifestyle. Don’t beat yourself up if you fall into this category — you’re not alone.
But now is the time to get back on track. High credit utilization may have affected your credit score in 2020, so in 2021 you should work toward raising it. Fortunately, there are several ways to boost your credit. Paying down debt, making on-time payments, and keeping your credit utilization low are just a few.
You can also open a secured credit card as a means to improve your credit score. They charge no annual fee or interest; plus, additional features make them an attractive option for someone who wants to safely build credit.
2. Create a budget and stick to it
You can’t improve your financial fitness if you’re not sticking to a budget; it just won’t work. A budget is a simple tool that can do amazing things for your financial health.
Writing down your monthly income along with all expenses gives you a clear picture of where your money is going. From there, you can find areas to cut back on and set strict spending limits for yourself. There are plenty of free budgeting tools out there that can help you get started.
3. Develop healthier financial habits
Developing healthy financial habits has never been more important. You’ll naturally start thinking of ways you can accomplish this after creating a budget. Here are a few examples of healthy financial habits that you can work to develop in 2021:
- Start eating out less and cooking more cheaply at home.
- Go to less expensive grocery stores or start buying store brands and clipping coupons.
- Set spending limits for online shopping.
- Walk to more places to save money on gas.
These changes may seem small, but expenses add up quickly. By implementing small changes in your daily routine, you could potentially save a lot of money.
4. Start socking away money again
When you start to make financially smarter choices, you’ll have extra money on hand that you didn’t have before. It’s what you do with these extra dollars that’ll make or break you in the long run.
Be smart with the money you’re accumulating and actually put it into a savings account. Not only that, but now is a good time to revisit your 401(k). Determine whether you should be putting even more money away for your retirement. Most people stick with the match percentage that their company offers, but why not go even higher? You’ll thank yourself later.
5. Pay your bills on time
This one is so simple yet so important. When you don’t pay your bills on time, your credit score will suffer. If you need to borrow money in the future, you’ll pay a higher interest rate for the privilege. Long story short, not paying your bills on time comes with consequences.
To avoid these negative consequences, write down all of your monthly bills along with their due dates. Set up automatic payments whenever possible so you never miss a payment.
This is also a good opportunity to evaluate any subscriptions or memberships you may not absolutely need anymore. Whether you set up autopay or not, the more aware you are of your monthly bills, the better you’ll keep up with paying them.
6. Consider a side hustle
There’s never a bad time to pick up a side hustle. If you can fit it into your schedule, give serious consideration to picking up a second gig. There are plenty of ways to make money online and without ever leaving the house. Here are some side hustles to consider if you’re looking to make a little extra money in 2021:
- Offer your opinions in exchange for money with paid online surveys.
- Become a customer service representative for a big retailer.
- Look for part-time remote jobs or freelance work that aligns with your skill set.
- Educate for extra income by becoming an online tutor.
Picking up a side hustle can help you recover from some of the financial trauma you may have experienced in 2020. With the right extra gig, you could be well on your way to getting out of that rut.
7. Write down your long-term financial goals
It may sound stressful to think about future financial goals right after one of the hardest years ever. Nevertheless, now is the right time to sit down and think about your long-term financial aims. Doing so will help you take baby steps toward achieving these goals.
For example, if one of your long-term objectives is to save for your child’s college education, you can set up a dedicated savings account. With such an account, money is deposited directly from your paycheck into the savings account so you never see it.
It’s an amazing tool because you can watch your savings grow without having to do much at all. The best part? You can use a dedicated savings account for anything you’re trying to save for: a house, a car, etc.
You might be overwhelmed at the thought of putting your finances in order, but it doesn’t have to be stressful. Getting your money situation on the right track should be a top priority in 2021. It won’t take long for you to write down your goals and start attacking them. After all, financial health and mental health go hand in hand. Make sure you give both their due this year.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.