With the start of the New Year, it’s prevalent to make resolutions to hit in 2021. Many create New Year’s resolutions revolving around their finances, including creating a budget or paying a specific amount for a debt owed. Here are five ways to decrease bad financial behavior and increase the actions taken to have a successful financial year in 2021:
1. Aim for a weekly budgeting plan instead of a monthly plan
Many people have a difficult time sticking to budgets once they are created. Instead of a monthly budget, creating a weekly one can give individuals more flexibility. According to Lamar Brabham, CEO, and founder of Noel Taylor Agency and via Yahoo! News, many people find it easier to stick to weekly budgets versus monthly budgets because they are more inclined to check it. Spending just five minutes a week reviewing a weekly budget increases financial budgeting goals by 20 percent.
Obtaining different stocks, bonds, and other assets should be high up on the list for creating healthy money habits. Investing is the most efficient way to build wealth, which will give significant returns. Advisors or robot-advisor can help decide what should be invested and when to buy and sell what is invested.
3. Credit score
Working and improving a credit score, especially if not taking a loan out in the near future, is the perfect opportunity to build this in 2021. Improving credit score can be done by paying bills on time and paying credit cards off in full each month or at least keeping them below 30 percent of your available credit.
4. Emergency funds
Putting off an emergency fund may be common, but now is the best time to do this. Having about six months of living expenses tucked away in a great rule of thumb for the uncertainties in life.
5. Paying off debt
When debt is managed, this can help free up money for retirement. Always pay more than the minimum requirement and not taking out credit card debt while still paying off credit card debt. Additionally, paying down debt toward the credit card with the highest interest rate, and then repeat with the next card of the highest interest rate.
Taking a hard look at your finances and seeing what you can eliminate from your budget can go a long way. Additionally, having a “money day” where time is designated to pay bills, checking accounts, and checking a weekly budget will keep the 2021 goal for a successful financial year organized and stress-free.