There are a lot of things currently out of our control. Like where we can travel, what we can do, and who we can see. But one thing that we do have some control over is our finances.
2020 was a tough year for many, a year full of ups and downs, and lessons learned. But now that we’re in 2021 we’re feeling optimistic. We’re ready to turn lessons into actions and work towards some of the big goals that we didn’t quite have the energy to accomplish last year!
Plus, January is the perfect time to review your finances. It’s a time where you can think about how you spent your money in 2020, and consider how you’re going to manage your finances over the coming months.
So, if improving your finances is at the top of your 2021 to-do list then get started by following these three simple tasks. We know they’ll definitely help you improve your finances and could make this your best money year yet.
1) Set New Budgets By Category
When it comes to setting a new personal budget, you should start by thinking about what you want to achieve financially over the next year. Think about all areas of your finances, (savings, spending, debt, pensions etc) and work on setting some goals.
You could set general goals, such as “increase my savings”, “reduce my debt”, “spend less”, although the more specific you are with your goals, the better.
Once you have an idea of the financial goals you’re working towards, you need to reflect any changes in your budget. If you’re hoping to increase your savings, cut costs, or reduce your debt, you’ll need to play around with your budget so you can achieve these goals. Doing this will really help you improve your finances in 2021.
As an example, I’d like to increase the amount of money I add to a savings account every month. My income hasn’t changed since last year. So I need to adjust the amount of money I spend on other areas. To add another £100 into my savings I, therefore, need to (realistically) decide which areas I can cut back on. I might decide to spend £50 less on shopping. £30 less on groceries. And, I might even see if I can spend £20 less on my bills each month.
This activity of balancing your income with your outgoings can really help you evaluate how you want to spend your money. But, it’s important to stay realistic. There’s no point reducing your budget in one category if you know you won’t be able to stick to it.
How To Set New Budgets:
This January you could try using a money management app like Emma to set a new monthly budget. Just open the app and click on the Analytics tab. From here you’ll see the word “budgets” in the top right-hand corner. You can start by setting a total budget, or you can delve deeper and set individual budgets by category.
If you’re not sure how much to budget for each category, the Emma app offers suggestions by showing you your previous average spend by category. This is based on your recent spending history. Once you’ve set all your budgets by category, make sure that the total amount isn’t more than the amount of money you have to spend. If it is, continue balancing your budget.
Throughout the month Emma will group your spending into these categories, helping you keep track of how much you’ve spent vs how much your budget allows. We’ll also occasionally send you notifications letting you know if you’re likely to overspend in any area, giving you a little nudge to reduce your spending, or cut back in other areas.
2) Review your subscriptions
If one of your financial goals for 2021 is to save more money or reduce your debt, then you might be wondering how you can best achieve this. The most obvious way to reach these goals is to earn more money, or spend less money.
If earning more money isn’t on the cards for you right now, then cutting back on your spending might be the best way to go.
Reviewing your subscriptions is one of our favourite money-saving tips. It’s also one of the easiest ways you can reduce your spending. Subscriptions could be anything from entertainment services like Netflix, Disney +, and Spotify to food delivery boxes, dating sites, online gym classes, or even career-boosting subscriptions on sites like LinkedIn.
How To Review Your Subscriptions:
This January take the time to review which of your subscriptions still serve you. You might find that you no longer need, or want, some of the subscriptions you’re paying for each month. You might even find that you’re paying for something that you’d completely forgotten about!
Money management apps like Emma can help you review all your subscriptions in a matter of minutes. Once you’ve downloaded the app and have linked all your accounts, we’ll be able to scan through your transactions and pick out the recurring payments. We group all of these payments into a subscription section on the app, helping you clearly understand what regular payments you have, when they’re due, and how much they’re likely to cost.
3) Explore New Ways To Save Money
Another simple task you can do to improve your finances in 2021 is exploring if there are any new methods of saving money. Luckily, there are a surprising number of money-saving tricks you can use to save.
To start with you could try and cut the cost of your energy bills, or your broadband. Or you could search for a cheaper phone plan. Exploring if any brands you regularly shop with offer cashback deals can also be a great way to reduce costs.
Then you could review all your insurance policies. It’s a well-known fact that brands don’t offer the best deals for existing customers, so shopping around for new deals on your home, car, life, and holiday insurance can be an excellent way to save some money.
You may also find that there are opportunities to save money when it comes to things like your pension, or your credit cards. Make sure you prioritize checking the rates on your various cards and research whether you could be getting more bang for your buck.
How To Save Money:
A simple way to check if you’re getting the best deals is to use Emma’s “Save Money” tab. We’ve rounded up lots of different ways you can save money across bills, pensions, investments, loans, insurance, credit cards, current accounts, and mortgages! All you need to do is click into the type of saving you’re most interested in, answer a few questions, and we’ll provide you with more information on how to save.
We understand that the world is a little doom and gloom right now, but getting on top of your money by completing these simple tasks really will help you improve your finances in 2021.
If you have any other ways you’re planning to improve your finances in 2021, then let us know on Twitter, or on the Emma Community!
Similarly, make sure you check out our Instagram account for daily tips on managing your money, improving your money mindset, and getting the most out of your money!