2020 sure was a hectic year. So much was spent and so little saved because of unforeseen circumstances. In the US, the personal savings rate went down from 33.7% to 13.6%. There was no time to sit back and budget as the grocery shops were running out of goods.
2021 on the other hand seems entirely predictable; we’re already living in the pandemic and we’ve gotten quite used to it. Are you wondering how you can manage your finances in a time like this? Here are six ways to take control of your finances this year:
- Review your income
Get a sheet of paper or use tools such as Microsoft Excel to help you note down all your income sources. You can then sum them up to know precisely how much money you earn at the end of every month. Next, make a list of all your monthly expenditure: the bills, the fees, the mortgage, etc. and compare it with your income. Do your expenses exceed your income? If yes, then you will have to make changes to reverse it. Otherwise, you might find yourself financially struggling this year.
- Have a budget
After reviewing your income, prepare a monthly and daily budget. A budget gives you a fair idea of how much money you’ll be spending in a day, which helps to know your cash position at any point in time and to know if you’re spending outside the budget or not. It will also go a long way to prevent impulse buying, which keeps you living within the estimated budget. You could use the 50-30-20 rule as a guide. Allocate 50% of your income to cater to your essential needs, 30% for your occasional indulgence, and the remaining 20% for your savings.
- Pay off debts
It is advisable to pay off expensive debts with high-interest rates first. Talk to your bank or lender to find a payment scheme that works for you. You could also apply for payment holidays if you’re a furlough employer or apply for homeowner loans with Evolution Money for debts such as your mortgage. Consider paying one debt at a time as you may get overwhelmed or feel overburdened trying to pay them all at the same time.
- Don’t get scammed
Mobile and online transactions are the order of the day, mainly because of the ease and convenience that come with them. As companies and other agencies try to make their systems sophisticated and modernized to ensure safe and smooth transactions, scammers have also devised other smart ways of duping people; they call, text, and impersonate. Scammers could get you to reveal passwords, share personal details, or even get you involved in fake investment schemes. Be on the lookout for them and always verify anything you find dubious when it comes to your finances
- Be thrifty, not stingy
Yes! There is a difference between being stingy and being thrifty. A stingy person doesn’t spend money, and it’s not because they don’t have it. On the other hand, a thrifty person spends only when they need to and wisely, always aiming to pay the minimum necessary. A thrifty person also follows a budget. You don’t have to starve yourself to save; you have to be economical, look out for discounts, scout the market to know where you can get the same product but at a lower price. You’d be surprised at how much you could save.
