- If you’re making resolutions for the new year, make one of them a money resolution.
- Our Top 10 money resolutions for 2021 include updating your beneficiaries and ensuring that you have insurance to cover yourself and starting an emergency fund.
- You could also grow your wealth by paying down debt or choosing to start investing.
The disruption of 2020 has shown that nothing is certain.
Many people had their finances disrupted in 2020. The new year provides a fresh opportunity to have more control over your money and end 2021 in a better financial position.
Money provides opportunity.
It helps us create the future we want by being able to make choices without needing to worry about money. If you are making resolutions for 2021, make one of them a money resolution.
Here’s our Top 10 money resolutions for 2021:
1. Update your beneficiaries
You work hard for your money to support your family. And that includes looking after them when you’re no longer around. Death is uncomfortable to talk about but you need to ensure your money goes to those you care about. That includes updating the beneficiaries of all your bank accounts, including your retirement account. Don’t forget to also update these as your life changes so that your ex doesn’t get all your stuff.
2. Check your insurance policy
Life happens and you need to ensure you’ve covered in the event of an emergency. Look through the insurance you need, including considering income, health and car insurance. Check what your insurance covers what you care about and that you’re getting a good deal for your money.
3. Review your bank accounts
Many of us still have the very first bank accounts we opened. Look at your money situation and what bank accounts you need. This will likely include a transaction account for everyday expenses, a savings account, an emergency fund, a retirement account and an investment portal. Review these accounts regularly to check they still offer a competitive interest and fee structure.
4. Use your oven and cook at home
If you want to cut back on your expenses in 2021, cooking is a great way to make it happen. That means breaking up with your dependent relationship on takeaway apps. It means picking up a recipe book and shopping for fresh ingredients so you have them in your fridge. You can also look at how you can save money on your grocery bills so that you’re saving even more money this year.
5. Start a side hustle for extra income
A side hustle means having a job on the side that generates money, in addition to your day job. 2020 saw many people have their day job income disrupted so a side hustle has the advantage of insulating your cash flow. Look at the skills and time you have to draw on and look at some side hustle ideas you can start right now.
6. Pay yourself first
The idea behind this money resolution is to put your money towards your goals first. If you want to save 20% of your income this year, put it into your savings account as soon as you get paid. And automate it if you know that you’ll forget to do the regular transfer.
7. Care about your retirement
Most of us don’t think about our retirement while we’re young but in 2021, be the exception. Financial experts like Dave Ramsey suggest you should save 15% of your income towards retirement. Take the time to look at how much you’re currently contributing and know where your retirement fund is. If you’re in Australia, it could take you as little as 15 minutes to sort out your super.
8. Embrace a budget
If you don’t know where your money goes each month, you need a budget. Embracing a budget means you know what you spend life energy on. You can also then design your life by planning where you want your money to go in the future.
9. Rebuild your emergency fund
Most people dipped into their emergency fund in 2020 to cover unexpected expenses. In 2021, you should rebuild this back up to at least save $1,000. Experts like Dave Ramsey suggest that you should aim for at least 3 months of expenses. Make sure you’re clear on why an emergency fund is important and take steps to build it up.
10. Tackle your debt
Debt can hold you back from taking up opportunities. While there is good and bad debt, all debt increases over time unless you start paying it back. You can save money by calling your bank to negotiate your interest rate or seeing whether you can refinance. Financial counsellors or debt specialists can also provide specific individualised support.
A money resolution will help you start next year in a stronger position.
Ensure success by making a money resolution that is meaningful to you and achievable in 2021. What money resolution will you aim for this year?