As we stand poised to say goodbye to another year dominated by the global pandemic, we find ourselves once again faced with the challenges of a persistent and pervasive variant. With hopes and plans for a fresh start, the emergence of a new year represents the perfect time to establish a money-saving program and take control of your financial wellbeing. Here are a few tips to help you reach your goals.
The first step towards a successful savings strategy is to evaluate your current priorities. Life is different since COVID-19 arrived and, more than likely, so too are your goals. Changes are coming fast and frequent, and plans can get derailed in the blink of an eye so, the more you prepare, the better. Re-evaluating goals and priorities, and thinking about what life may look like going forward is an invaluable process.
Create a budget
Anticipating your expenses for the coming year may seem a bit daunting, but it’s a good idea to create a big-picture budget. Start by creating a monthly tally of your income and expenses to help fully evaluate your spending habits. Include items such as payments related to cars, home, entertainment, insurance, recreation and health and wellness, and consider any large-ticket items that may be on the horizon such as appliances. Maintain a written log, use online tools or a budget app, which will enable you to track your spending and receive alerts if you get off course. Actively monitor your budget and make adjustments as needed. The key is to set specific, actionable goals and stick with them.
Pay down debt
Staying in control of your spending is paramount at the best of times, and now even more so. Life situations have forced many of us to take out a personal loan or use credit cards more than we’d like. Maintaining some level of debt is not uncommon, but ensure it’s manageable and create a plan to pay it down. It’s important to tackle your high-interest debt first. Using credit cards is convenient but their interest can significantly increase the amount you owe every month. You may also want to consolidate your debt by taking out a line of credit or a debt consolidation loan. This allows you to move your debt into one place and benefit from one interest rate, one minimum payment and one repayment term, helping you to reduce your debt faster and increase your savings.
Automate savings
One of the easiest ways to save is through an automatic plan where a regular, pre-determined amount is automatically deposited into a savings or investment account. This makes the savings process effortless and ensures consistent payments are put aside to help meet your goals. You can always start small and make adjustments at any time – the key is contributing consistently.
Refinance your mortgage
COVID-19 has triggered a number of financial implications, one of the most significant being historically low interest rates. If you’re a homeowner, you may want to consider taking advantage of the low-rate environment by refinancing your mortgage, which will reduce your monthly mortgage payments. Even a small drop in interest can make a big difference. The less money you spend on your mortgage, the more you’ll be able to put into your savings. Keep in mind, however, that a refinance carries pre-payment penalties, so you’ll want to speak with your mortgage agent to assess the costs.
Change habits
For 20 months, disruptions to daily routines and making important adjustments to the way we live and work have become customary. And from this, we’ve realized there are many things we can live without and are willing to let go. Many people are cleaning out their closets, de-cluttering their homes and selling items they no longer need through online classified groups.
If you’re no longer paying a gym membership, driving to work or buying a fancy coffee every day, take the extra money and put it aside. Evaluate existing subscriptions, consolidate your streaming services and leave online shopping items in your cart until you’ve had time to assess whether it’s something you truly need. You may be surprised at the amount you can save from these simple measures alone.
Have questions about saving more money in 2022? Answers are a call or email away!