5 ways to take control of your finances in 2021

2020 has been a difficult year on so many levels. Everybody’s had it tough, and COVID-19 certainly hasn’t made things any easier from the lockdowns through to business closures. That’s not to mention the state of the nation’s personal finances either, with a study from money.co.uk indicating that 51% of respondents had gotten into debt during the course of the year.

Fortunately, 2020 is nearly behind us with 2021 promising a fresh start and the chance to make up for lost time. Change is on the horizon for many people, whether that’s a new job or just the chance to travel again. One thing that won’t change, however, is the importance of looking after your personal finances.

As we head towards 2021, here are five of the best ways to look after your money and maybe even turn your fortunes around.

1. Start an emergency fund

If you could boil 2021 down into a single salutary lesson, it’s that we should all expect the unexpected. Few could have foreseen the global impact of the COVID-19 virus, and fewer still could have begun to imagine just how close to home it would strike.

With many people unable to work, and the Government unable to match the usual salaries of furloughed workers like for like, an emergency fund might just have eased the burdens of the past year.

Going into 2021, why not make it your goal to put a month’s worth of wages into savings. Keeping money aside will help to ensure that you’ve got enough to keep you going come what may, giving you the confidence to do what you need to do whilst safe in the knowledge that you’re financially secure. It could be that you find yourself between jobs, but you might equally need some money to pay for unexpected repairs to your home or vehicle.

Either way, a cash cushion is never a bad thing.

2. Set goals early

Sticking with the topic of goal setting, you should try to do so early on. January usually starts with the best of intentions for your New Year’s resolutions, but maybe 2021 should be the year that you work towards financial independence rather than taking out a wasted gym membership.

Depending on what it is you want to achieve, an early start on your financial goals could supercharge the results. Whether you save or invest money, the longer it’s there, the more money you stand to make. This is all down to the power of compounding, meaning that time could help you to multiply your holdings.

The earlier you start working towards your goals, the easier they’ll be to meet.

3. Automate everything

If you find it hard to save money, 2021 could be the perfect opportunity to try something new.

Modern banking is about more than just checking your balance online, and it’s entirely possible to completely automate your deposits and investments. Whether you set up a direct debit that forces you to save money on payday, or if you use an open banking enabled app to invest the spare change left over from purchases, take the choice out of your own hands and make those gains automatic.

Automation is your friend when you’re trying to reach lofty financial goals, and 2021 might just be the year when you don’t miss a single month of saving.

4. Deal with debt

Debt is a major barrier to financial stability, but sometimes it’s necessary. 2020’s events have put a financial strain on so many people, and nobody would blame you for having taken out a line of credit or piled some of your Christmas shopping onto a credit card.

Either way, 2021 is a new year and it’s time to deal with your debt. This will almost certainly require hard work and determination, but there are some things you can do to help lighten the load. For one, automating your payments could help here too since you won’t have to worry about missing a loan repayment date.

Another idea might actually involve taking out another personal loan. Whilst this may sound counterproductive, it could really help if you find it difficult to keep track of what you owe. By taking out a short-term personal loan, you could pay off your existing debts and consolidate your outstanding balance under a single liability.

To get the ball rolling, you might find Little Loans’ online quick check tool helpful. This will help you to find out if you’re eligible for a loan, and it’s one of the first steps towards finding the direct lender that is most likely to accept your application.

Debt can be hard to kick, but a little inventiveness could help you to find your way to financial stability.

5. Create a budget

It’s nothing new, but a budget really could help you to take ownership of your own financial situation this coming year. Knowing what you have coming in and going out could really open your eyes to the reality of earnings and debt – allowing you to identify areas in which you can make real change.

Sometimes there’s no need to reinvent the wheel – and a detailed budgeting journal or comprehensive excel spreadsheet could be all it takes to get a full picture of your finances.

A healthier, wealthier 2021

Moving forwards into the new year, there are lots of things that can be done to help progress your own financial plans. So whether you need to kick your debt or want to start putting more money into savings, take action and don’t leave it all down to chance.