Many people have found 2020 a very difficult year for finances. It may be that you have had a reduced income, were furloughed, or even lost your job or your business. If this is the case, you’ve almost certainly experienced extreme stress and uncertainty during what has been a harrowing year for people across the globe.
However, with the news of a vaccine for COVID 19 rolling out, there is now hope that this period of financial uncertainty may soon start to ease, and 2021 could indeed be brighter (but let’s just think it for now rather than say it out loud).
Businesses that have adapted to the challenges of 2020 may just about have kept afloat and as such your finances may be looking a lot less stable at the start of 2021 than you’d ideally like. If that is the case, you’re probably concerned about how you can most effectively manage profits this year and particularly how on earth you can start a savings procedure to ensure that you have something of a safety net if we have to face further lockdown challenges this year. You may be worried about paying down the debt that you accumulated in 2020. You will need to be open, honest and face your issues head-on so that you can start 2021 with a clean slate and a realistic expectation for your finances.
Creating Savings Accounts (x2!)
Accumulating money in your savings accounts isn’t always as hard as you might think (Covid-19 lockdowns notwithstanding). These can start with small changes to your home life (we’ll go on to talk about this in more detail later,) which may seem minor but can actually make a big difference overall. With less money spent on day to day life, you can save the extra into a savings account which can build over time. This can be used as an emergency account in case you experience job loss or financial insecurity again. You can use this money when you can’t find the cash to pay for rent or bills, or even food for your family. You will then want to set up a second savings account, this will be one from which you save for holidays, treats, and home improvements. By separating your accounts in this way, you can get a clear picture of what money you have to spend, and how you would fare should you be hit with a financial crisis. The Balance recommends that 5 to 10% of your income should go towards an emergency account. They also suggest you plan your financial goals in the following structure:
- Short-Term Financial Goals – Expenses coming up in less than one year
- Long-Term Financial Goals – These are up to ten years and might include expenses like replacing your kitchen appliances, making major home repairs, purchasing a new car, etc.
- Extremely Long-Term Financial Goals – Over a decade goals will include building a university savings fund for your children or maybe even purchasing a second home.
By setting your goals up in this way, you can obtain a clearer picture of what you want to achieve with your finances. This is a good technique to start off with immediately in Jan as it begins the year off on the right foot.
Small Changes That Make a Big Difference
Earlier we spoke about making small changes that will have a large impact on your finances as time goes on. Online loan provider Wonga published a list of 40 massive money-saving tips that covers many of these small changes, we’re including some of the best below but recommend giving the blog post a read for even more ideas.
Unplugging appliances: Appliances on standby draw electricity that can total between 10% and 20% of your electricity bill. So, turn them off when not in use! TVs are one of the biggest culprits.
Don’t boil an overfull kettle: Every time you boil an overfilled kettle you waste energy, so, get into the habit of boiling one cup at a time when you are craving your next cup of coffee.
Plan your meals: It is a good idea to plan what your meals will be at the start of each week. Write this up on a whiteboard and then only buy the ingredients you need for that week. You can also get in the habit of eating leftovers for lunch the next day, instead of heading out to the expensive sandwich shop at work.
Grow your own: If you have a garden and are able to, growing your own fruit and veg is a good way to reduce costs at supermarkets. If you can’t, you can grow fresh herbs on window ledges. This is cheap, easy, and can save you a lot of money on fresh herbs.
Forget the branded household cleaners: You could save up to R1500 (just over $100 US) a year when you stop buying expensive household cleaners. Many internet sites show recipes for creating your own, made with vinegar, which is just as effective. Youtube in particular is a massive archive of free tips now, all you have to do is sit through a few online ads.
You might also consider walking more instead of taking public transport, cutting down on branded shops and heading to charity shops instead, or even cutting alcohol or cigarette consumption as a big way to cut down on the costs.
That’s all we’ve got for today on the tips front folks! Some parting wisdom for you now. Don’t give up and stay mindful of the mini battles you fight throughout the day. This doesn’t just apply to your wallet (although it’s a very useful mindset to have here); this applies to trying to eat healthier, exercise more, and live a happier more present life. Whatever your challenge may be the year ahead is made of these mini moments we face every day. It’s a marathon, not a sprint so don’t beat yourself up too much if you trip, fall and lose a few seconds. Don’t give up. You’ve got to stay in it to win it!
Good luck, have a wonderful 2021, and please share any personal saving tips that have worked for you in the comments below 🙂