Moving into 2021 and the New Year gives us a fresh start and a chance to make resolutions. Many of us make the same old ‘ideal me’ resolutions regarding losing weight, eating more healthily, or taking up a new hobby or learning a new skill that will enrich our lives.
It goes without saying then that one of the most popular ‘ideal me’ resolutions every year is inevitably regarding money; specifically regarding the subtleties of spending too much of it, not saving enough (but typically both these things).
It’s easy to see why! Money issues can have massively detrimental effects on family life. The data (courtesy of perk box) makes for alarming reading:
“over a quarter of adults experience financial stress on a daily basis.”
They conducted the study across UK households, revealing that a whopping 27% of adults feel stressed about money every single day. This can lead to depression, problems with sleep, relationship problems and even high blood pressure and health conditions. With this in mind, making a resolution to address your money issues is key to living a happier and healthier life in 2021.
So, where do you start? Well of course, everyone’s financial situation is unique, and you should approach it how you feel best, but these tips can help you to address certain areas of your finances and give a basic framework for you to work from:
#1 – Excessive spending
It is all too easy to spend excessively with the ease and convenience of buying things online. If you have been in isolation due to COVID 19 or a national lockdown, then you will also know how easy it is to spend money when you’re bored at home and want a pick-me-up. If you haven’t tried Amazon’s literal ‘swipe to buy’ feature on their app then don’t start now – they’ve made it appallingly easy to buy anything. In this age of uber convenience and excess commercialism it’s no wonder compulsive spending is a priority culprit in why people can’t save money or pay off debts.
This excess counts double during the fervor of seasonal Christmas spending. The online loan provider Wonga conducted a study and published some insights directly into the festive spending period in South Africa. It showed the following:
47% of South Africans reported that they are worse off than they were this time last year, (mostly due to the pandemic) with only 20% saying that they were in the same financial position.
The research went on to reveal that 75% of South Africans spend more than usual over the festive season. 9 in 10 people plan on buying gifts and, while 75% plan on spoiling their family. 19% are planning on buying themselves a gift this Christmas too! This kind of spending if not controlled with checks and balances can be extremely damaging to finances, especially as it is in the spirit of goodwill and generosity towards your fellow man and family as you can easily blow through a monthly budget and still justify the reckless spending to yourself. Steps must be taken throughout the year to save for this event, so you can spend safely knowing the money has been side-lined for this.
#2 – Debt Management
Debt is a hard one to overcome because there is no quick fix solution. Like sustainable weight loss, it’s a marathon not a sprint. You will only accomplish debt freedom if you change core lifestyle habits. If you are entering 2021 with debt, one of the best things you can do is draw up a repayment plan to pay down the debt as quickly as possible (reducing the interest paid on it.) It’s also wise to speak with your debt lenders to let them know you are struggling, in the majority of cases they can help you work out a plan for repayment that is realistic for you. Afterall, it’s in their best interest to help you find a way to pay them what they’re owed even if it takes longer than initially agreed.
Many people feel embarrassed when talking about money, debt especially so. This is the kind of stigma we need to try and break down as a society. Open discourse and honesty helps us talk about our problems and presents opportunities for help and education that otherwise remain forever closed behind the gateway of ‘we don’t talk about that sort of thing, it’s just not done!’ with that logic women wouldn’t have the vote and we’d be stoned for having a child outside of wedlock! Society moves forward when we break down outdated social modes that have become obsolete.
#3 – Poor monthly budgets
A great way to prepare for the year to come is by getting a free budget template (you can download a ton of these for free online.) All you need to do is input your own data i.e. your income, outgoings and other expenses to get a bird’s eye view of your spending each month. You can then see what free money, if any, you have left.
This top level overview also allows you to identify ‘problem areas’ in your budget such as any direct debits you don’t need – like forgotten gym memberships, or a particularly expensive utility bill that you haven’t renegotiated for years (you would be surprised what you could save with a simple phone call or half an hour on a utility comparisons website like uswitch. Fighting these mini battles for cash savings here and there can help stop the money hemorrhaging and can add up to quite the substantial lump sum over time!
Sometimes when you see you have extra money at the end of the month, you want to spend it, treat yourself or your family. However, you should really try and prioritise saving money. You may then be able to afford something even better, like a holiday or even emergency funds for when you need it. If you struggle with saving, start small, just a little here and then can help. The more you accumulate, the more positive you feel and so it causes you to add more to the savings pot, and then more again. It can have a snowball effect which is a positive way to begin your savings journey.