How to Manage Your Money in 2021
Spending and saving money carefully has always been a good idea, but with all the uncertainty in the world this year, good money habits have become more important than ever. Practicing good habits now will not only set you up for financial success in the future, but it will also improve your mental and emotional health.
So how do you manage money better in 2021? Let’s look at some top money management tips.
1. Get to Know Your Spending Habits
With purchases just a click or a swipe away, it’s easy to end up with an empty bank account and little understanding of where all of your money actually went. Our first money management tip is to start with tracking your spending.
A good way to reset your spending is to simply pull out your last bank statement and review all of your transactions. How much did you spend on food? Entertainment? What about other categories? Which expenses could you do without in the future? Make a plan for how you will spend better, and stick to it.
2. Get to Know Your Income
If you work a regular 9-to-5 job, this money management tip might be easy for you. But for those who do freelance projects, work odd hours, or do gig work, taking stock of how much you’re making each month can help you have a clearer picture of how to spend and save better in the future.
3. Create a Budget That Works for You
As you can probably tell, learning how to manage money begins with being aware of what you spend and save. After that, it’s time to start doing both more intentionally.
Everyone budgets differently, and the key is to find something you’ll actually stick with. Maybe it’s the old-fashioned cash envelope method, perhaps you prefer spreadsheets, or you might simply choose one category you need to work on (for example, eating out) and focus on that. Whatever you choose, get in the habit of knowing how you can use your expenses and income to improve your financial future.
4. Start or Grow Your Emergency Fund
Whether a surprise medical bill or an expensive car repair, sooner or later we all face emergencies. Make 2021 your year to start or grow your emergency fund, so that when problems happen, you have the money to deal with them. Start with what you can afford — whether that’s $20 a month, $50, or $100—and over time your savings will grow, so you can comfortably handle life’s challenges when they arise.
5. Save for the Future
It’s never too early to plan for your retirement and other future expenses. Investing in your retirement early has a number of benefits. For one, money invested early has extra time to earn interest. The earlier you begin to save, the more money you’ll have at retirement—and with less invested—than those who begin saving later in life. Also, retirement savings usually have a tax advantage, so that saving for retirement now can shrink your tax bill at the end of the year.
How to Manage Your Money: Make Credit Work for You
Finally, at some point you’ll probably need to take on debt, whether a mortgage, car loan, or maybe a personal loan. Whatever the case, make 2021 the year you take some time to understand how credit works and how you can use it to reach your financial goals.
Lift Credit can help. Head over to our Credit Education Center to learn what your options are and how to use credit to your advantage.