New year new financial you: How to become a budget dollar dynamo in 2021
Monday, 25 January 2021
Millions of Americans had their ﬁnances upended by the COVID-19 pandemic in 2020, whether due to job loss, reduction of hours or drastic lifestyle changes.
If you were one of the millions who experienced economic stress in 2020, the beginning of a new year can be the perfect time to take steps to regain control of your money and position yourself to move forward ﬁnancially. Here are six suggestions:
1. Stick with your pandemic budget spending habits
Chances are, your spending habits changed signiﬁcantly in 2020. You probably spent much less on dining and entertainment. If you worked from home, your commuting costs likely plummeted. Perhaps you found an alternative ﬁtness routine when your gym was closed.
Even though we all hope life will return to normal in 2021, why not factor your new spending habits into your 2021 budget planning? By making these reductions permanent—no costly gym membership, fewer restaurant meals— you could free up money to pay down debt or boost your savings.
2. Rebuild your emergency fund
Many Americans were forced to dip into their emergency savings during the economic crisis caused by the pandemic. If you were one of them, you understand the value of a rainy-day fund and probably want to focus on rebuilding yours in 2021.
Why not make 2021 the year you live with less? Again, you were probably forced to cut spending and do without many things during the pandemic. Continuing this trend — and actively working to ﬁnd additional ways to save — could help you get back on your feet faster. Think about it: could you live without cable, get a cheaper cell phone plan or nix subscriptions you rarely use? Even eliminating minor expenses can add up and help you rebound, rebuild and regain your ﬁnancial conﬁdence.
3. Get professional help
Many people think ﬁnancial consultants are just for wealthy people. Not so. Financial consultants also specialize in helping people build wealth instead of just helping them manage it. Even if you only meet with an advisor a few times, he or she could help you create a plan to spend less, save more, pay oﬀ debt and start investing.
4. Get serious about retirement
If 2020 taught us anything, it was that saving money is beyond important. Because savings — any kind of savings — can be crucial to surviving uncertain economic times.
That said, if you aren't saving for retirement, make 2021 the year you commit to start. If you have started, resolve to contribute as much as you can — particularly if your employer matches any of contributions (this is basically free money). Not sure how much you'll need to retire? Check out our retirement calculator.
5. Reset your investments
The stock market took a hit in the spring of 2020 as the pandemic shut down much of the U.S. economy. It has since rebounded; however, there are certainly some stocks that have not recovered from impact of the pandemic.
If you currently have money in the stock market —whether through direct share holdings or through mutual funds — it makes sense to review your investments to see if you need to make adjustments in response to the volatility of the past year.
This includes your retirement savings. Many people tend to leave their employer-sponsored retirement savings alone. However, most of these plans let you decide how your money is invested. Making sure your money properly allocated can make a big diﬀerence down the road.
6. Prepare for future uncertainty
Another valuable lesson from 2020 is that we need to be prepared for anything. That means taking steps to protect ourselves emotionally, physically and ﬁnancially.
One of the most important ﬁnancial steps you can take is to build your savings. Also, reviewing your insurance coverage — medical, property and life — can provide additional protection and peace of mind. And don't neglect longer-term ﬁnancial issues such as creating a will and organizing essential documents.
If you're like most Americans, you were more than ready to say goodbye to 2020. As you kick oﬀ 2021, making some ﬁnancial adjustments and commitments can help you minimize the impact of 2020, regain your ﬁnancial footing and prepare for what will surely be a brighter new year.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
You may also be interested in:
Savings & Budgeting
How to open a checking account
Are you thinking of opening a checking account to better manage your income and expenses? With the COVID-19 pandemic affecting jobs and the economy, it's a good time to make sure you're in control of your finances. Here's a step-by-step guide on how to open a checking account.
Family & Career
Money tactics for new college graduates: 4 ways to boost your workforce readiness
After all the hard work you put in to get your diploma, don't be surprised if you find yourself wondering if you're ready to take the next step into the professional realm. It's completely normal to have these thoughts. It's also fine to realize that the answer might be “No."
Savings & Budgeting
10 money moves you can use to save and earn more
Sometimes even small money moves can result in big rewards. Here are 10 smart, strategic and simple money moves to help you earn more, save more and prepare for a brighter financial future.