The year 2021 holds lots of uncertainties for almost everyone- poor or rich. That’s because the Covid-19 pandemic that struck in early 2020 has wrought havoc on national economies.
Countless companies around the world had to down shutters for good or declare bankruptcy, causing rampant unemployment.
Unfortunately, all of continue to grope in the dark over what our personal financial situation would be in 2021. Therefore, it’s high time to make 10 important money resolutions for 2021. And to adhere to these new year's resolutions as steadfastly as possible.
Losers & Gainers in 2020
Before proceeding to make these 10 important money resolutions for 2021, let’s explore where we stand with our personal finances.
If you’ve lost employment due to the economic downturn, 2021 could prove to be rather rough. With no certainties about efficiencies of any vaccines against Covid-19, we can expect social distancing and other precautions to prevent the contagion to continue in 2021.
Furthermore, the focus in 2020 shifted from offline jobs to online work. And if you’re unable to work online, it’s possible you might be staring at long-term unemployment.
However, with some grit, you could overcome unemployment and start earning a decent income once again.
Now let’s look at the gainers. Millions of women and men have inherited money from their relatives that fell victim to Covid-19, other medical conditions, accidents or even natural causes such as old age.
While the death of a loved one is indeed unfortunate and sorrowful, the inherited wealth can be put to good use as a befitting tribute to the one that left you their legacy.
Top 10 Money Resolutions for 2021
Regardless whether you’re among the losers or gainers, making some serious money resolutions for 2021 can help immensely to overcome any crises while making the best of available resources.
You could adapt these money resolutions according to your location, education and other considerations.
1. Have Multiple Income Sources
The year 2020 proved that dependence on a single source of income can prove very disastrous. In the US alone, we had more than 60 million people file for unemployment benefits.
We can’t as much estimate the number of people that lost their jobs and only income during 2020 due to economic impact of the Covid-19 pandemic.
And the only way to protect your family and self against such unforeseen financial hardships is by having multiple sources of income. Nowadays, there’re plenty of side-gigs available both offline and online.
One of the best ways to make money online is by starting your own blog in 2021. Learning to blog isn’t difficult. It’s a home-based work that you could do in leisure and enjoy.
You can open a blog about your hobby, profession or some skill you’re good at. Reading a good online tutorial on blogging can help you earn money in this manner.
Having more than a single source of income helps you step up savings, repayment of mortgage and debts as well as provide some level of financial security to your family and yourself.
2. Reduce or Eliminate Credit Card Debt
Nearly half of all adult Americans have credit card debt, a report by CreditCards.com finds. This means, about 120 million people owe money to credit card issuers such as banks and financial institutions.
During the Covid-19 pandemic, credit card debt grew by about 23 percent among Americans.
Having a credit card is fair enough, but you should know how to use it. We often use it for online payments and especially at a time when we’re short of cash. A credit card is also very useful for building a healthy credit score provided we don’t default on payments.
Credit cards come with something known as Annual Purchase Rate or APR. Credit card issuers settle for five to 20 percent of your debt as the monthly repayment. And the remaining amount gets carried forward with a stiff APR. The rate of APR can vary between 19 percent and 32 percent, depending on the issuer.
Often, this means that you’ll end up paying several times over the cost of the stuff you buy using a credit card, unless you settle the full amount immediately or within a short period.
In fact, a large credit card debt can also harm your credit score and possibly. Step up credit card repayments to save on APR. Instead, you can use the money you save for better purposes.
3. Eliminate Useless Expenses
America has a spending problem, with over 79 percent of the population overspending or even taking credit and loans to buy expensive stuff, according to various reports in the media. Some even splurge money on luxuries they can ill afford.
Most of us indulge in useless expenses without even knowing. For example, we might have lots of channel packages for cable TV and Direct-to-Home satellite TV. If you rarely watch channels from these packages, discontinue subscription. The same holds true for Amazon Prime and Netflix among others.
Another useless expense, in my opinion is buying expensive clothes and gadgets when we really don’t require them. About 82 percent of gym memberships go unused or are underutilized. And we often subscribe to newspapers and magazines that we never read.
Dining out occasionally is fine but making it a habit costs dearly. Of course, dining out at restaurants hit rock bottom in 2020 due to the Covid-19 pandemic and the need for social distancing. Yet in 2021, as restaurants and bars reopen, avoid falling prey to this nagging temptations of overspending.
4. Give Up Vices
On average, an American spends $2,944 on vices, says a 2018 survey published by Bankrate.com. These include dining out at least thrice a week, alcohol and tobacco products as well as lottery and other forms of legit gambling both offline and online.
This works out to over $200 per month and maybe higher if you’re addicted to booze, smoke, legit weed and lottery.
By March 2020 or during the peak of the Covid-19 pandemic, spending on alcohol shot up by whopping 54 percent across the US, finds Nielsen Research. And online liquor purchases shot up by 242 percent during this period compared over 2019.
Figures for tobacco sales aren’t clear at this moment with some sources claiming they grew by about three percent while others saying there was a drop of nearly two percent. That’s due to conflicting reports about the impact of smoking on Covid-19 virus itself.
In 2021, you can save this precious money and put it to better use as part of your money resolution. Seeking help of medical professionals can help you rid the booze and smoke addictions.
5. Utilize Discount Coupons & Loyalty Points
On average, an American wastes between $100 and $199 worth loyalty points every year, says a 2019 study published by Bankrate.com.
These loyalty points come from credit cards and frequent flyer clubs of airlines as well as select offline and online stores. Only about 18 percent of all Americans are aware they’re actually wasting precious loyalty points that’re worth a lot of money.
About 10 years ago or in 2011, Americans accounted for whopping $16 billion worth wasted loyalty points. And in every likelihood, this figure would have risen exponentially. Means, you could be wasting more money without realizing.
In 2021, make this important money resolution of using all your loyalty points for whatever they fetch. In fact, some loyalty programs offer free shopping vouchers and coupons for online and offline stores.
Airline loyalty points can earn you discounts or even free tickets, complimentary hotel stays. This can save you a lot of money.
6. Invest Inherited Money
And if you’re among those people that’s got some money as inheritance, create a portfolio of stocks, Exchange Traded Funds, Mutual Funds, retirement plans, long-term saving plans and others.
It’s not necessary to have inherited millions of Dollars to embark on your investment journey. Even a few thousand Dollars would suffice.
An average inheritance in USA is about $50,000 says a 2019 report by New York Times. Unfortunately, most people squander the money even before getting the inheritance. Others tend to overspend their inheritance carelessly and are left with almost nothing within a year or two.
Financial experts warn against wasting money you inherit. Morally speaking, wasting inherited money is tantamount to insulting the deceased relative.
And financially, you’re inviting disaster because the money can become a valuable financial resource if you invest wisely. So if you’ve got a cash inheritance, make it work for you to fetch more money.
7. Sell Useless Stuff
In 2021, make a firm money resolution to sell all useless stuff lying around your home. While you’ll definitely make some money by getting rid of stuff that’s saleable and lying without use at home, it would also clear a lot of valuable space at home. The money you get could be invested on some worthwhile savings plan.
Simply take stock of the stuff lying unused at your place. You might come across a lot of useless furniture, used appliances, old books you no longer require and lots of other stuff that be sold for recycling or resale by dealers. Look around for dealers in your area that buy these things or hold a garage sale.
Used clothes are one more thing that you can sell for cash or exchange for other garments. There’re plenty of consignment stores around USA that would readily buy your used clothes.
However, some consignment stores buy only branded products from top labels while others aren’t very particular as long as the clothes are in superb condition.
8. Start Small Investments
Most people falsely believe the myth that investing on stock market requires hundreds if not thousands of Dollars. That such investments are a privilege of the wealthy or those having surplus cash at hand. These are all false. Thanks to various apps, you can start investing on the stocks and commodities market with as low as $5 only.
There’re as many as 27 best investing apps available for free from Google Play and Apple Store. Among these, there’re six apps- TD Ameritrade, E-Trade, Robinhood, Acorns, Fidelity and Webull, where you can actually start investing on stock market with small amount of money.
And the good news: some of these apps such as Robinhood also give you one free share depending upon the value of your investment.
Using these apps, it’s possible to invest on American and foreign stocks, Exchange Traded Funds (ETFs), Mutual Funds, currencies, commodities and cryptocurrencies, among others. Paid versions of some of these apps are also available which help you to identify the best avenues to invest and other benefits.
If you’re wondering how a small sum of $5 can help buy a precious stock, here’s how it works. These apps allow you to buy something known as fractional stocks.
That means, you’ll get a fraction of one stock for the small amount of money. And when you keep buying these fractions regularly, they add up to one whole stock. The same principle applies to other investments you make with these apps.
9. Rework Your Insurance
Americans in some states spend as high as $9,000 per year on employer insurance premiums, finds a report by the Commonwealth Fund. And despite having health insurance, Americans sometimes cough up as high as $7,000 as out-of-pocket expenses for medical treatment.
Therefore, reworking your employer insurance is one of the things you should do in 2021, if possible.
Before renewing your existing policies or buying new ones, shop around online or seek help of a financial advisor. You can save considerable amount of money you’re paying as premiums.
In 2021, reducing your expenses on unnecessary insurances is something you could resolve to do. Insurance is fine as it covers your family and you against uncertainties of life. But 2020 has proven that insurance covers too can prove useless in several ways.
10. Create an Emergency Fund
And finally, creating an emergency fund is one of the most important new years resolution you can take for 2021. The year 2020 has amply exposed how frail a lot of Americans are to financial emergencies. Borrowing money to meet emergencies isn’t always easy. And overspending on credit card isn’t advisable.
The best way to counter these avoidable scenarios is by creating an emergency fund. Set aside a small portion of your income for the emergency fund. You can invest the money in short-term plans that offer best returns.
Keep reinvesting the money to make it grow. Should an emergency really strike, you would have some sort of financial security to meet it or a buffer against extra expenses. And if there’re no emergencies, your money continues to grow.
In fact, an increasing number of Americans and people around the world were awoken rudely to the need for an emergency fund by the Covid-19 pandemic in 2020.
There’re no guarantees that our lives would be the same as in 2019 and earlier. To counter any adversities an emergency fund is the best option.
Understandably, making and sticking to important new years resolution for 2021 will require some tough measures and lots of self-discipline. However, these would prove to be very vital to ensure your financial security in a world that’s changing drastically after the 2020 Covid-19 pandemic and its financial aftermath.
At the same time, we’re learning to live without a lot of things that we took for granted before 2020. And in 2021, we can easily dispense with such expenses that only make us spend a lot while depriving us of money for savings and investments.
Hopefully, 2021 would prove to be a better year financially for all of us.
Title: 10 Extremely Important Money Resolutions for 2021
Meta description: Completed with a list of new year resolution for 2021? Good, but I would suggest go through these 10 important Money Resolutions which you should follow in 2021