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, taking up a new hobby, or learning a new skill to enrich our lives. OOne of the most popular ‘ideal me’ resolutions every year is inevitable regarding money, specifically the subtleties of spending too much of it and 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 the perk box) makes for alarming reading:
“over a quarter of adults experience financial stress daily.” They conducted a study across UK households, revealing that 27% of adults feel stressed about money daily. This can lead to depression, sleep problems, relationship problems, and even high blood pressure and health conditions. With this in mind, resolving 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, 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 that compulsive spending is a priority in why people can’t save money or pay off debts.
These 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 that 47% of South Africans reported that they were worse off than they were this time last year (mostly due to the pandemic), with only 20% saying they were in the same financial position.
The research revealed that 75% of South Africans spend more than usual over the festive season. 9 in 10 people plan on buying gifts, while 75% plan on spoiling their family. 19% are planning on buying themselves a gift this Christmas too! If not controlled with checks and balances, this spending can be extremely damaging to finances, especially in the spirit of goodwill and generosity towards your fellow man and family. 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 your core lifestyle habits. If you enter 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 most cases, they can help you work out a realistic repayment plan. After all, 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 break down as a society. Open discourse and honesty help us talk about our problems and present 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 many of these for free online.) All you need to do is input your data, i.e., your income, outgoings, and other expenses, to get a bird’s eye view of your monthly spending. 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 budgets, such as any direct debits you don’t need – like forgotten gym memberships or a costly 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 can help stop the money hemorrhaging and add up to quite a substantial lump sum over time!
#4 – Not knowing HOW to save
Sometimes, when you have extra money at the end of the month, you want to spend it to treat yourself or your family. However, it would help if you tried to prioritize saving money. You may then be able to afford something even better, like a holiday or emergency funds for when needed. If you struggle with saving, start small, just a little here, and then you 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, a positive way to begin your savings journey.
