Resolutions for 2021 and your money

New year’s resolutions are like relationships which start out well in the beginning but possibly don’t make it through the first few months.

With 2020 dealing a solid wake-up call to many, it would be prudent for more people to set those resolutions and be fiscally responsible going into 2021.

There are some simple things one can do to enhance or preserve money, ranging from earning more to just simple behavioural changes to limit bad habits. Today’s article will explore a range of these simple changes one can implement to ensure 2021 is prosperous and you end the year with more money.

CREATE A BUDGET AND TRACK YOUR EXPENSES – The revision of one’s daily expenses and seeing where money is spent can be a frightening task. Don’t run away from this task as it can show you where you can cut down on some expenses and thus help you to redirect those funds to savings or another productive task in your life. A budget involves listing all income sources and outlining all expenses, to effectively see where money goes once that pay cheque hits your account. Simply carrying a water bottle rather than purchasing several drinks during the day can save you a lot of money.

OPEN AN INVESTMENT ACCOUNT – As a renowned chief executive officer said recently in a series, shifting some money from your bank account to a brokerage firm associated with that bank can substantially increase the return on your money. Between stocks, bonds, unit trusts, repurchase agreements and other financial products there are a wide array of options one can utilise to enhance the returns of your money. A stock with an eight per cent dividend yield which is reinvested continuously can compound your investment return beyond your wildest thoughts. Even if the dividends (profits paid for owning the stock) go to something else, that’s money you didn’t have to work harder to achieve.

CREATE BETTER SAVINGS HABITS – Many people struggle to save as they alternate/vacillate between managing regular expenses and not improving the ways in which they save money. The $50 challenge where one saves every $50 trather than spend it could be a good start to improving fiscal habits. Some persons saved upwards of $60K in 2020 despite the challenges COVID-19 presented to them. Although some people might get tempted to spend this money, creating a second bank account and utilising a certificate of deposit could be a good way to ensure the money is saved accordingly.

Review SUBSCRIPTION PACKAGES – In the age of digitisation there are very few free services that provide a needed level of quality with minimised risk which tend to come from use of those websites. As a result, there is a subscription package many people apply for to access quality services for a monthly or annual fee. If you have services which are rarely used, it would be best to only renew the subscription when it’s needed rather than simply incur the cost if the benefit doesn’t significantly outweigh the risk. Essential services, especially cybersecurity, shouldn’t be taken lightly but some subscription plans might not be necessary.

SET UP BETTER RISK MANAGEMENT TOOLS – As more people realise the risk associated with having all their money tied to just their debit card in one bank account, it will become critical that you carefully asses how to protect your money. Creating a second account not connected to your debit card and keeping excess cash in that account would be one way to reduce general risk. You could just transfer funds to the debit card when needed and leave a minimal amount in the account so that the risk of loss is greatly reduced. Other options could include blocking the card through your bank’s platforms and setting up notifications to ensure that you’re aware of any transactions that go through your account. A credit card is another choice one could employ in the sense that you use your credit card everywhere and pay down the balance immediately after getting home. If the card is compromised you could report the transaction, have the card cancelled, and get a new one in the mail shortly after. Your money would not be at direct risk since the credit card is actually using a facility the bank extends to you — which simply means that it’s not your money.

MONETISE YOUR SKILLS – Don’t underestimate the simple tasks or things related to your passion that people are willing to pay you to do. Doing paid surveys, fixing systems, writing content, inputting data or seeking freelance opportunities online are all ways you can earn more money in your spare time. Earning more income is the best way to improve one’s life, and with a growing digital world your next job could be on your phone or in Europe through an online system.

PAY BILLS EARLY AND MANAGE CASH FLOW – Paying your bills early is a great way to avoid late fees, maintain a good credit score and even get possible credits for paying your bill early. It also creates better responsibility in managing cash flow since one would have to plan for those expenses. By delaying payment of bills, other expenses can creep in and disrupt your planned expenditures and this can negatively affect your general plans for a period. Managing cash flow means delaying certain things based on the priority of planned expenses in an upcoming time frame. It ensures you don’t get careless on a limited salary.