A new year is quickly approaching and that means a fresh start. Among the most common new year resolutions, money goals often take the lead. In fact, the 2020 New Year Financial Resolutions Study by Fidelity Investments found that 67% of respondents made a financial resolution including saving more, paying down debt and spending less. Considering more Americans than ever are struggling to make ends meet thanks to the pandemic, there will likely be even more people vowing to makeover their money and budget come January 1. But here’s the thing, you don’t have to wait..
Here are 3 simple things you can do now to improve your finances before we ring in 2021.
Begin paying down debt.
Of the most common financial goals people set out to make every new year, paying down debt is at the top of the list. However, you can build more momentum toward reaching financial freedom in 2021 by starting to take steps to pay off your balances now.
Begin by reviewing all your cards to figure out how much you owe and note the interest rates for each. Tackling the balance with the highest interest rate first will save you more money. Stay accountable by using an app like Debt Free to track your debt pay off efforts. Otherwise, consider transferring your balance to a new credit card offering 0% interest on balance transfers. This ensures the money you’re putting to the balance each month is actually shrinking it and not going to fees.
Set up financial safety nets.
Creating financial security for your family is crucial. While it’s important to build a nest egg and have money set aside for emergencies to get you through any tough financial times, it’s equally important to consider how life insurance can protect those you care about most. Although no one wants to think about worst-case scenarios, it’s important to have a plan and a term life insurance can reduce financial burdens in the event something tragic happens. Life insurance can pay for rising funeral costs, mortgage payments, and other bills, childcare or even go toward’s your child’s future college education.
Sites like Haven Life, an online life insurance agency backed by MassMutual, makes it simple to apply for affordable term life insurance online, right from your couch. When determining how much coverage to get, aim for 5 to 10 times your annual salary. Surprisingly, this is very affordable for most! According to havenlife.com, a healthy 35-year-old woman can buy a 20-year, $500,000 term life insurance policy for about $20 per month. That’s like one order of takeout and a small price to pay for peace of mind.
Trim 1 or 2 expenses from your budget.
People tend to fail at their resolutions because they go all in and then get burnt out. It’s much easier trying to turn one new behavior into a recurring habit than it is to completely overhaul your life—talk about overwhelming! Begin building up to a more financially savvy you by reviewing your budget now and finding either one or two small expenses you can eliminate or cut back on every month. Look expenses like dining out costs, entertainment, and beauty. Cutting out just one order of takeout a week, canceling one streaming service you really don’t watch, and scaling back on weekly manicures to just once a month can free up a nice chunk of money in your monthly spending to set you up for even more momentum to saving in the new year. Plus, you’re likely to spend more on holiday purchases right now so this gives you extra wiggle room in your gift budget, too.