Guiding your life’s biggest financial moments

Personal Finance

An unresolved plan for better finances in 2021

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The New Year is usually a powerful time to think about how you might want to turn things around and / or make some positive changes in your life. For some of you, that might mean eating healthier, exercising, paying off debt, or developing new financial habits.

Notice I didn’t mention anything about a New Years resolution? The reason is that research shows people don’t stick to it!

Instead, I want to offer you some simple, yet effective strategies to help you change your lifestyle that, in the end, will not only help you take control of your finances, but also become the best. version of your financial self-reliance.

The first strategy to help you start your New Year is to define CLEVER money goals. CLEVER. is an acronym which means Specific, Measurable, Achievable (Where Feasible), Realistic and Timely.

Let’s start with Specific and measurable. Here is an example: your goal may be to “spend less or invest more.” It’s a big goal, but not specific enough. If you said instead, “I will save or invest $ 1,500” it’s a bit more specific and measurable.

Now let’s look at the Achievable and realistic making up. Using the same example, if you said, “I will invest $ 125 of each paycheck directly into my savings or retirement account or to pay off a specific debt” which is probably achievable and realistic.

Your goal should also be Timely, which means you have a timeline to complete it. In this example, you said you wanted to reach your goal in one year and $ 125 / month over 12 months equals $ 1,500 for the year.

So if you really want to hit your financial goals (or any other goals!), Do them CLEVER

You need to be aware of your spending. Understanding where your money is going is the foundation of developing healthy spending habits. Technology has made it easier to keep track of your spending, and you can use multiple apps, most of which are available on all of your devices. For example, Mint’s personal finance app lets you create a budget, track your bills, and monitor your spending and debt. Truebill is also another financial tracking tool that makes it easier for you to take control of your money and be in control of your financial life. You can also use the “50/30/20 To reign” – 50% of your income is allocated to the satisfaction of your Needs, 30% to your wants, and 20% to savings.

You also need to be aware of your debt. Take the time to sit down and make a list of your debts to determine which debt you need to pay off first.

You may want to start by settling the debts with the smallest balance first, known as “Debt Snowball Method”. Another strategy is to begin by paying off the debt with the highest interest rate, known as “Debt Avalanche Method”.

It is important to save for emergencies. The general recommendation or rule of thumb is to save between three and six months of household expenses. However, in light of the pandemic, I recommend increasing it from nine to 12 months. If you haven’t already set it up, make it a goal.

Try to make investing a habit. Start with your pension contributions. Set up automatic contributions if you haven’t already. If you’re already doing this, consider increasing your contributions by 2% (or more) of your income, then set it up to automatically increase by the same amount next year.

Commitment is the key. If you commit to following just a few of these tips over the next year, you can improve your chances of getting your personal finances in motion and meeting your financial goals for 2021. You can do it. !

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