No doubt 2020 brought some hardship on everybody, but especially on those who may have been living paycheck to paycheck leading up to it. Some may have always been prepared for events like flooding and hurricanes, but an event like COVID-19 has proven to be something you really can’t fully prepare for given how completely unexpected it was. It may have ruined the new year’s resolutions of some heading into 2020, but it may have inspired new ones for 2021, such as sound budgeting so you can have more emergency savings on hand. If you’ve not taken the time to create a budget before, it’s not too late to get one planned for the new year.
Take Stock Of Your Spending –
It is good to support your locally-owned restaurants if you can considering how difficult it’s been for many of them to stay open. So in some respects you might be thinking of money you’ve spent on them as charity for them to keep running. But for other money that you would normally spend on other entertainment businesses, that’s money you may want to take elsewhere and put in your regular savings.
It’s easy to get caught spending extra on at-home entertainment like more movie subscriptions, or video game consoles. And even once the virus goes away, you might be thinking of how much you’re going to go spending on vacation resorts or big items. But if you can hold off on that spending and dedicate more to saving, that will take a lot more stress off of you and make it easier to withstand future hardships.
Consider A Proven Budget Plan –
The essence of budgeting is actually not doing away with all things fun when it comes to your money. It’s simply keeping track of your money so that you know exactly where it’s going, and knowing at all times what you can afford. There’s different methods to create a budget that don’t require creating from scratch. You can research them for yourself to see how they work, and they include the following:
- Zero-based budget
- The 50-30-20 budget
- The envelope budget
Whichever one you feel would meet your goals the best is the one you should go with. Other financial experts who host podcasts have their own budgets too.
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Make Cutting Down Debt A Priority –
A major reason for creating a budget is to avoid or cut down debt that you’ve been dealing with. The most common debts are credit cards and student loans, but auto loans are also up there. The most important thing to do is to cut down on or possibly eliminate credit card spending altogether because you don’t want to constantly be making interest payments on this debt. And while it can be substantial, credit card debt is usually the smallest debt you’ll need to pay off, making it the first debt you should eliminate. If you have a mortgage, you should always hold off on getting ahead of that one until last.
Look At Ways To Bring In More Income –
Not only should you be finding ways to save more of your take home pay as part of your budget, but you should also increase that take home pay. Maybe you’re not fully prepared or able to take on a second job just yet, but it doesn’t even necessarily have to be that. There are ways to make money doing certain hobbies or teaching others skills you know right from the comfort of your own home. If you’re willing to do a little driving, you might enjoy making some extra money doing food deliveries on your own time. But get some supplemental income so that you can free up more of your primary income for savings and ongoing expenses.
Don’t Forget To Invest –
One way to save but also be prepared for and protected against inflation is to invest. If you have a 401k where you work, then utilize it. It’ll be there to draw from once you reach retirement. But you don’t have to just stick to that. Consider opening a brokerage account and investing a little money that can bring in extra dividends in the short-term. You may need to consult with an advisor about investing which may cost a little money. But having money in investment accounts is a great way to be ready for the future!