What do you need to do to improve your finances in 2021?

I know all of us are looking forward to putting 2020 in the rearview mirror.  But as we do that it is a perfect time to prepare for 2021.

Other than the obvious COVID-19 circumstances, another topic on the minds of most Californian’s is personal finances and the stress that comes with it.  With all the job losses and the severe economic slowdown, getting your personal finances in order is a perfect way to prepare for any surprises that may pop up next year.  Below are some vital areas to consider for improving your financial wellness in 2021.

Budgeting

The top way to improve your finances is to create a budget comparing your monthly income with your monthly expenses.  This will help you live with the money you are bringing in and illustrates areas where you may be overspending or even have extra money to help pay off some debt.  allU.S. has free budgeting and money management tools to help you get started.

Personal Debt

The most common budget expense for people is debt, which could be credit card, mortgage, student loans, etc.  It’s very important to understand your debt and develop an action plan to keep your debt under control in an effort to meet your personal financial goals.  

If your debt is high it may be worth considering a debt management plan to help stop collection calls, lower interest rates or monthly payments.  Debt management professionals say people who utilize a debt management plan can usually pay off their entire debt in three to five years.  The most important thing to remember is don’t wait to ask for help until you’re in too deep.  Meet your financial crisis head on.

Taxes

Taxes are the number one area that people overlook when it comes to their personal finances.  There are many opportunities that can help reduce your taxable income like retirement plans, flex spending accounts, charitable donations and even Health Savings Accounts (HSAs).  It’s simple.  By planning out your pre-tax contributions for 2021, you can maximize your tax savings which may help to increase your disposable income.  It’s important to consult a tax professional to evaluate your options.

Evaluate Your Interest Rates

This next step may not be pleasant, but it is necessary.  It’s important to examine all the interest rates you are paying on your loans, which include credit cards, auto, student and mortgages.  You may be able to improve your finances and put more money in your pocket by evaluating how much you could save by refinancing or transferring some of your current debts.

Infuse Your Savings With Cash

Many people can’t handle a financial emergency because they simply don’t have enough money saved. This has become most apparent in this year’s economic decline.  According to bankrate.com over 37% of Americans would have to use a credit card or take out a personal loan just to manage unanticipated expenses.

I can’t express enough how important it is to make saving money an essential habit.  It’s easy to start by putting a little away each month.  As your income increases or expenses decrease start building up a cushion for rainy days.  

Investing

You may already be investing money each month for the future.  But, if you’re not this should be an essential part of your financial wellness plan.  Look to your employer first.  Many employers offer retirement plans like 401ks.  Your employer may even match the money you put aside which helps your balance grow even faster.  There are many investment opportunities to review.  It may make sense to contact an investment professional who can help guide you on what investments make the most sense for your situation.  The sooner you start investing, the more time your money will have to grow.

Make 2021 Your Best Financial Year Ever

By following these simple tips for budgeting your money, managing your debt, boosting your savings and planning for your financial future, you will hopefully be prepared for anything that 2021 may toss at you.  If you are looking for a financial partner that can help, consider allU.S. Credit Union.  We are dedicated to our members in support of ongoing education and financial well-being. We’re committed to being your financial advocate, providing you the necessary resources to better manage your money and make informed financial choices. 

Clean Up Your Finances for the New Year!

After a year of spending, saving, paying off bills and racking up rewards points, your financial life can get a little messy. The end of the year is a great time to regain control of your finances. When you de-clutter your accounts, paperwork and budget, you’ll find it’s a lot easier to make the most of your money.

Roll up your sleeves, dust off your statements and follow these tips for finances that sparkle:

  • Make a budget.  Take the time to examine your budget by detailing everything you spend money on each month, from gas and to dining out.  You’ll see how much you actually need to have on hand each month and what is left over for saving or spending.
  • Streamline your banking. Close up old accounts, switch to online bill pay and sign up for e-statements to reduce paper waste. Shred year-old bank statements, expired warranties, old Social Security statements and tax documents that are over seven years old.
  • Consolidate your debt. Consider rolling all of your high-interest payments into one low-rate personal loan. Close credit cards you don’t need and create a payment strategy to lower your debt. Plan to pay off credit cards with the highest interest rates first.  
  • Organize your savings. Many households have multiple savings accounts, including IRAs, CDs and 401(k)s. Consider moving all of your savings plans to financial institution and consolidating all IRAs to one account. Talk to your employer about moving old 401(k) accounts into the one at your current job, or rolling them to a self-directed IRA. Finally, increase your 401(k) savings so that at a minimum you are saving enough to earn a full match from your employer.
  • Check your credit report.  If it’s been awhile since you last checked your credit report do so now.  Checking your credit report every six months is a smart way to make sure you haven’t been a victim of identity theft. Click here to find out how to get a copy of your credit report.
  • Plan your estate. Update or create your living trust. It’s a fairly easy process that people often put off for obvious reasons. If you have any property (car, house, land, etc.), a living trust prevents lengthy legal battles and guarantees the right people receive your belongings upon your passing.

Need help tidying up? Stop by the allU.S. Credit Union branch or give us a call. We’d be more than happy to help you clean up your finances for 2016!