how to stay financially fit in 2021

The conversation around self-care and wellness has never been more topical than in 2021, a…

The conversation around self-care and wellness has never been more topical than in 2021, a year where our resilience and ability to look after ourselves feels even more challenging than 2020. But there’s one piece of the puzzle that is often neglected in those conversations around stress and mental health: money. 

Even before the pandemic, the impact of money worries on mental health was well-documented. According to a survey by The Money and Mental Health Policy Institute, 86 per cent of people said that their financial situation had made their mental health worse. In addition to other ways we attempt to improve our wellbeing, it’s more important than ever that we do our best to look after our financial fitness as best we can.

As someone who neglected her financial wellbeing for a very long time, I know all too well the damage that it can do. In the spring of 2019, I finally reached a breaking point in my relationship with money. I had over £27,000 of credit card and overdraft debt – not from lavish purchases or exotic holidays, but from over a decade of incremental overspending and big life milestones that I hadn’t budgeted for. Since then I’ve paid off over £20,000, building a community on social media of almost 70,000 people discussing money in a different, more emotionally intelligent way. I finally feel in control of my money, rather than it being in control of me.

Whether you’re dealing with debt, struggling to save or just wondering how you could be making the most of your money, there are some steps that you can take to have a financially fitter year in 2021:

Kick-start the year with a financial MOT

Laying it all out on the table can be daunting, but it’s important to know the lay of the land before you can make a plan. Start by looking at your debts, savings and assets as well as your income and regular outgoings. Get it all down on paper and you might even want to annotate that with how each of those numbers makes you feel. 

If your situation is particularly complex, it might be a good idea to consult with a financial advisor. 

Get clear on your goals

Once you know where you are, it’s time to start thinking about where you want to be. Set some solid achievable goals for 2021, whether you want to start investing, clear credit card debt or save for retirement. Set a timeframe and value for each of your goals, and track your progress throughout the year. 

More than three or four goals can feel overwhelming and you might like to structure them as long-term and short-term aims. Ambition is great, but make sure you’re not setting yourself up to fail.

Treat budgeting as part of your self-care

Budgeting gets a bad rap. We often associate it with deprivation and misery, but all it is really is having a plan for your money. When setting up your budget, it’s best to keep it simple – just track your income against your outgoings and make sure you know where your disposable income is being directed.

In many ways, creating your budget is the easy part – sticking to it is where we tend to fall down. One of the best ways to overcome this, in my experience, is to make a ritual out of it. Check in with your budget on a weekly basis, and treat it as a way of looking after yourself, like checking in with yourself about your drinking habits or how often you exercise.

Get a grip on emotional spending

It’s almost impossible to live with a budget if you don’t have a grip on your spending. Particularly throughout this unpredictable time, shopping has become one of the only coping mechanisms available to us, but the temporary dopamine hit of an online impulse purchase, or that feeling you get when a parcel drops onto your doormat, is often outweighed by the guilt that comes afterwards. 

Emotional spending can be cyclical, with one purchase leading to another, but there are ways to break that cycle and adopt a more mindful approach to shopping. Taking time to make spending decisions, as well as putting in some “circuit-breaker” questions about whether we actually want an item and why, can help us to combat those impulses.

Start planning for your future

If 2020 has taught us anything, it’s that it’s hard to feel financially fit if you’re just getting by in the present. For a real feeling of security we need to know that we can cover unexpected expenses and build wealth for our future, to know that we’ll be able to retire comfortably one day and enjoy our time without constantly worrying about money.

Building an emergency fund, in case of a big bill or loss of income, should be your first port of call, with six months of living expenses being a good amount to aim for. After that, you can look at investing to grow your money, or paying more into your pension for an earlier or more comfortable retirement.

We’re all used to the idea of making physical fitness and self-care resolutions for the new year – but financial wellness is an important element of our general health and wellbeing, too.

Real Life Money: An Honest Guide to Taking Control of Your Finances by Clare Seal (Headline).  Buy now for £14.99 at books.telegraph.co.uk or call 0844 871 1514

Starting from next week, and for the next four weeks, Clare Seal will bring you a financial fitness tip in our 365 newsletter every Monday morning. Click here to sign up

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