5 Financial resolutions to make for 2021
When we talk about New Year resolutions, we limit ourselves to diets and exercises. Year 2020, the year of shutdowns, job losses, disease, death and dismay, has taught many of us that the area of our lives that really needs attention is our finances.
The coronavirus pandemic has caused financial hardships for people worldwide because of job losses, salary reductions and other challenges. It has impacted almost every aspect of our lives. Here are 5 financial New Year's resolutions that can help improve financial health.
Build Your Emergency Fund
Risk is a part of life, prepare for the unexpected. Experts suggest that the emergency fund should cover 3-12 month's of expenses. Calculate your monthly expenses by adding your rent or mortgage, utilities and basic needs. If you already have an emergency fund, make a resolution to add to the fund to cover an additional month or two. If you haven't started an emergency fund yet, don't worry. Make a resolution to open a high-yield savings account and setup a monthly automatic transfer.
Create a Budget
Creating a budget and sticking to it in the new year is a resolution that will improve your financial health. You can do this in 5 simple steps:
1. Calculate your income
2. List your expenses
3. Identify opportunities to reduce expenses
4. Set savings goals
5. Record and monitor the goals
If you are not investing, you are missing out on big returns. Investing is a way of making your money work for you. Even if you have a small amount of money to invest, you should make a resolution to start investing in the new year. You can either invest on your own or seek the help of a financial advisor. Modern day technology has invented robo-advisors, that can help you decide what to invest in including when to buy and sell.
Investing could take a lot of time to understand, but it is also the fastest way to grow your money. There are many platforms like Acorns, Stash, and M1 Finance that can make investing less intimidating and can get you started on any budget.
Get Your Will in Place
Millions of Americans led a normal life one and were distanced from their families the next - in nursing homes, emergency rooms, hospitals and other places. So many people died without Wills or Estate plans, leaving their loved ones to deal with unfinished paperwork and difficulties. In the event you die without a Will, your states laws will determine who takes ownership of your assets and property and also who will take care of your children. A Will is strongly recommended, if you have children, have a spouse, or have a positive net worth.
Improve Your Credit Score
What's your Credit Score? Credit scores range from 300-850, but you don't need to get to 850 to get the best offers. Experts recommend that any credit score above 760 gets similar offers. Higher credit scores will help you save money on mortgages and loans as lenders offer better interest rates for worthy borrowers. Refer to
Year 2021 is about to begin, so it's time to start thinking about your financial health.