Ring in the new year.
The start of a new year is a time to make financial resolutions, ditch bad money habits and consider ways to improve your financial health. To help you achieve those goals, U.S. News has published stories with great advice on how to save money, pay down debt and reach your financial goals. Read on for the best ways to improve your finances in 2021 and beyond.
Negotiate your salary.
One of the most effective ways to stretch your budget, reduce debt or boost savings is to make more money. Of course, that’s easier said than done. But don’t neglect the power of negotiating your salary, either at a new job or at your current job, to increase your earning power and improve your finances. Throughout the year, keep a list of professional accomplishments and workplace wins to help bolster your case for a pay raise.
Get rich the right way.
Don’t feel like you have to attend a pricey seminar or join a shady pyramid scheme to get rich. There are tried-and-true methods to slowly and surely build wealth, including reining in spending, taking advantage of employee benefits, investing wisely, being thoughtful about debt and finding a support system. Learn how to get rich the right way, and you’ll grow your wealth without risking your financial health.
Start using a budgeting tool.
Choosing the right budgeting tool can help you stick to your spending plan, allowing you to reach financial goals and improve your financial health. Options range from old-school techniques, such as using pen and paper, to new-school digital tools, such as SoFi Relay.
Consider a side hustle.
A side hustle or part-time job can stretch your budget this year. There is a range of part-time work available, including earning money online, contracting out your skills through an app or partaking in seasonal work. But be wary of employment pitches from multilevel marketing companies. Most sellers don’t make much money, so be skeptical of promises of vast wealth and riches from one of these companies.
Build a budget.
Having a spending plan is essential to managing expenses, paying down debt and preparing for the future. It doesn’t mean giving up all luxuries or beating yourself up every time you buy a coffee. Instead, it’s about understanding the money coming in and going out each month. Workers with inconsistent paychecks, such as musicians, waiters and salespeople, should be especially careful about maintaining a budget.
Time your shopping to get the best deal.
Some big-ticket items, such as furniture, real estate, cars, appliances and engagement rings are on sale at different times of year. Here’s the best time to buy everything, so you never overspend on essential products.
Open a 529 savings account.
If your children are headed to college or attend private elementary or secondary school, a 529 savings account is a tax-savvy way to save for qualified educational expenses. Understand the rules associated with these dedicated savings accounts and make room in your budget for regular contributions. Let friends and family know you’ve opened one. There may be a way for them to give contributions as gifts instead of gifting toys and clothing.
Take advantage of employer benefits.
If your employer offers educational benefits, retirement account contribution matches, low-cost insurance plans, student loan repayment assistance and other perks for workers, consider taking advantage of them. Open enrollment, typically in the fall, gives workers time to evaluate and select important employee benefits, so take time to consider the best options for you during that time of year.
Find a job with paid sick leave.
Employees without paid sick benefits are three times more likely to have family incomes below the poverty line, according to research. To avoid having to prioritize work over physical health, try negotiating with your boss for paid sick day benefits, finding a new job or, at the very least, building a financial safety net so you can afford to take unpaid sick days. Access to paid sick leave has been especially important during the coronavirus pandemic. Understand what options are available to you if you start to exhibit symptoms of the virus.
Automate bill payments.
The key to reaching debt payoff goals, hitting savings benchmarks and maintaining investing strategies is to automate payments, writes former U.S. News contributor Stacy Rapacon. Don’t forget to check in periodically to make sure everything’s on track. Conversely, you may want to “de-automate” purchases you make to outside companies. Consider downloading an app that tracks and manages subscriptions to see where you’re spending each month.
Know how you measure up on savings.
Saving is an important aspect of your financial life. So, how do you know if you’re on track with your savings? If you’re looking for some rules of thumb and a sense of how you measure up against other savers, here’s how much you should have in savings by month and by age.
Find unclaimed money.
There may be money awaiting you in various accounts. Find unclaimed money in former pension and retirement plans, life insurance policies, federal tax returns and via your 2020 stimulus check. If you don’t look, you may never have the chance to claim it.
Build an estate plan.
In addition to writing a will, consider other elements of your estate plan, including designating guardianship for any young children, considering a testamentary trust, examining the role of inheritance tax in the transfer of your assets and updating any beneficiary designations on important accounts such as life insurance and retirement funds. Doing this now will make it easier on your heirs when you pass away.
Protect your financial information.
With high-profile security breaches happening regularly these days, savvy consumers should take steps to protect their financial information. Those steps include using complex passwords, keeping devices up to date and never sharing personal data with others, says Steven Abrams, former contributor to the U.S. News My Money blog.
Remove yourself as a co-signer on a loan.
To remove yourself as a co-signer, you can apply for a co-signer release, ask the primary borrower to refinance or consolidate the loan, or sell off the asset financed by the loan. In general, your co-borrower will need to have good credit and be willing to help remove your name from the loan. But taking these steps can protect your credit if the primary borrower is unable to repay.
Claim your full stimulus check.
If your initial stimulus check payment didn’t reflect your 2020 income, parental role or filing status, claim your full stimulus check in 2021 by claiming the right amount on your taxes. You’ll need to keep track of important documents and look out for prompts when filing your taxes this year.
There are plenty of entertaining television shows, movies and video clips available on streaming services such as Netflix, HBO Max and Hulu. Reduce your monthly spending by ditching cable and subscribing to a few budget-friendly streaming services. Round out your viewing with a digital antenna to access local news, sports and entertainment. Just remember to regularly assess whether your streaming subscriptions are worth it. You don’t want to ditch cable just to overspend on digital streaming services.
Find a better bank.
If your bank charges high fees, pays low interest rates or is located somewhere inconvenient, it may be time to switch banks. Keep in mind that changing banks is complicated, so you’ll need to open the new account, redirect automatic payments and auto deposits and leave both accounts open for a while before you can finally part ways with your old bank.
Learn to co-manage your money.
If one partner or spouse takes sole responsibility over financial matters, the other tends to lose financial knowledge and skills, which can be problematic if the couple divorces or the money-managing spouse dies. To avoid this, discuss goals and financial topics together and make sure both spouses attend meetings with financial advisors. Confirm that you’re on the same financial page and look out for signs of financial instability in your partner.
Be smart about what you post on social media.
Oversharing details of your life, job or family on social media can harm your financial health, making you a target of scammers and fraudsters or even causing you to lose your job. Think twice before sharing personally identifying information or dissing your boss online.
Calculate your net worth.
Your net worth is how much you’re worth after subtracting your debts. Calculating your net worth can give you a full picture of your financial health and allow you to identify where to make changes in budgeting, saving, spending and other aspects of your life.
Spend less on working out.
Those gym memberships and boutique fitness classes can add up. That’s especially true if you haven’t been able to access your favorite workout location during the coronavirus pandemic. But there are strategies you can use to spend less on your physical health, including building a frugal home gym, using workout apps and buying fitness classes in bulk.
Say goodbye to “extreme” personal finance strategies.
Blogs, books, Reddit and online articles can make it sound like the only way to manage money is through some intense debt-payoff goal or frugal-living strategy. But be wary: Those extreme financial strategies aren’t balanced and may not account for unexpected financial emergencies or unwilling family members. Strive for balance when looking to achieve your financial goals.
Build an emergency fund.
One of the best ways to protect yourself from financial emergencies and setbacks is with an emergency fund. Aim to save three to six months’ worth of living expenses in an easy-to-access account.
Make a plan to pay down debt.
Paying down debt doesn’t have to be hard. Make a strategy to repay credit card debt, student loan debt or whichever bills are driving you crazy, then automate extra payments to ensure that you stick to your goal. Repaying debt can help you make room for achieving other financial goals and ensure that you’re ultimately paying less in interest and fees.
Take advantage of public and private relief options.
The coronavirus pandemic has left millions of Americans struggling to afford food, housing and monthly bills. While a range of COVID-19 relief options are set to expire at the end of 2020, some relief will continue through 2021. Make sure you understand how to apply for programs such as the Supplemental Nutrition Assistance Program, regular unemployment compensation, state and local benefits and any new programs rolled out in 2021.
Give your kid an allowance.
An allowance can teach your kid valuable money-management lessons and allow him or her to make mistakes in a controlled environment. Consider the pros and cons of giving your child an allowance and make the right decision for your family.
Sometimes the best thing you can do is turn down a family member asking for a loan or a handout. If helping out a friend or loved one is pushing you into debt or derailing your financial goals, stand your ground and offer nonfinancial support.
Buying used products can save you money and reduce waste. When shopping at a secondhand store, consider your location, shop at the right time of day and put your negotiating skills to use.
Sell your stuff for cash.
Offload unused items and improve your finances by selling your clutter for cash. There are myriad websites that allow you to sell excess items, including ThredUp, Poshmark and Gazelle. Keep in mind that objects such as laptops, pet supplies, furniture and baby items tend to sell well online.
Cut back on dining out.
Restaurant meals are typically more expensive than home-cooked dishes. Even ordering takeout can add to your food budget. To make eating at home more palatable, schedule a meal-prep day, learn to use your slow cooker and have plenty of cheap, nonperishable dinner ingredients in your pantry.
Lower your cellphone bill.
Your cellphone bill is likely a major line item on your budget. Reduce your cellphone bill by switching to a no-contract plan, keeping your phone longer, considering prepaid carriers and using Wi-Fi whenever possible, says U.S. News contributor Jon Lal.
Learn to cook.
Save money on food by learning to cook at home. Learn a few easy one-pot meals and keep long-lasting ingredients stocked in your kitchen for favorite dinners. Don’t forget to make enough for leftovers the next day. Reduce costs further by learning to save money when grocery shopping.
Subscribe to a money newsletter.
Get the latest updates on budgeting strategies, COVID-19 relief measures, retirement advice and other financial matters by subscribing to a money-focused newsletter. One good place to start: U.S. News’ Your Money Decisions newsletter.
Read a personal finance book.
There are myriad personal finance books available on everything from taxes to budgeting and investing. Make 2021 the year you crack one of those books open and start exploring strategies and concepts to improve your financial life.
Take advantage of shopping holidays.
Save money by knowing when certain items go on sale and when major shopping holidays take place. Well-known shopping holidays include Black Friday, Cyber Monday, Amazon Prime Day and tax-free weekends.
Build a passive income stream.
If you want to generate a regular paycheck without actually working, consider strategies to build a passive income stream. Options may include renting out a room, creating an online course, writing a book or investing in your retirement accounts.
Embark on a money-saving challenge.
Money-saving challenges can help inspire and encourage you to save money by making it like a game or contest. Money-saving challenges to consider include the no-spend challenge, the holiday gift challenge and the pantry challenge.
Write a will.
Thinking about your own demise is not an enjoyable exercise. But that shouldn’t prevent you from taking time this year to write a will, especially if the birth of a child or grandchild, a new marriage or another life event makes previous plans outdated.
Ditch unnecessary expenses.
Each month, you may unthinkingly pay for unnecessary expenses, such as pricey subscription services, financial commissions and extra insurance. Take stock of your spending habits and cut where needed. Making extra room in your budget can help you reach other financial goals such as saving for retirement or buying your first home.
Rethink your fear of debt.
Paying down debt, especially high-interest debt, is often a good move. But don’t let your aversion to credit dictate your financial life. Some debt products, such as student loan debt, mortgage debt, business debt and even an auto loan, may yield a worthwhile return and ultimately benefit your financial life.
Listen to a personal finance podcast.
Whether it’s about investing, money management or frugal living, find a financial podcast that keeps you informed and motivated.
Consider your insurance needs.
Many workers assume they have sufficient health insurance, disability insurance and life insurance through their employer. Do an audit of your insurance offerings and determine whether you need to seek additional coverage on the private market.
Get financially prepared to be a parent.
Listen, child care is expensive. So are diapers and clothes. If you’re thinking of one day starting a family, start planning now to ensure that you’ll be able to afford supporting those munchkins once they arrive.
Take a personal finance course.
There are lots of online courses designed to offer regular folks insight into how to better manage their money. Consider these top 10 personal finance courses if you’re looking for a lesson in personal finance.
Draw up a postnuptial agreement.
Married folks who didn’t sign a prenuptial agreement should consider a postnup. This document could include how homes, assets, retirement accounts and child support would be divvied up if your marriage were to end.
Invest in yourself.
Stay employable throughout economic downturns and industrywide declines. There’s no time like the present to build your career skills by attending workshops, earning certificates or going back to school. Bonus points if your employer pays for it through an education reimbursement benefit.
Define your goals.
You can’t achieve your financial goals if you don’t have any. Determine your short-term, medium-term and long-term financial goals, then create a plan to meet them. Make sure your partner or spouse is on board and has the same goals in mind.
Work with qualified professionals.
When assembling your financial team, make sure that you’re working with financial advisors, estate-planning attorneys and tax professionals who approach money in a way that makes sense to you and who have and maintain professional credentials and licensing.
Like anything else, personal finance undergoes its share of trends, from the tiny house craze to the FIRE movement to cryptocurrency investing. Evaluate each trend based on your current needs and goals before getting involved. Some may be a great fit. Others may not be right for you.
Have a prosperous year.
To recap, here are a few of the money moves you can make in 2021 to improve your finances.
— Consider a side hustle.
— Negotiate your salary.
— Find a job with paid sick leave.
— Build a budget.
— Become the CFO of your financial household.
— Take advantage of shopping holidays.
— Learn to cook.
— Ditch cable.
— Calculate your net worth.
— Listen to a personal finance podcast.
These changes will help improve your financial health next year and into the future.