So, you’ve chosen this year to work towards financial security? Luckily, though it can take a while to get there, the process is not that hard once you’ve worked through a few things.
All it takes a little bit of planning and a whole lot of dedication. Ready to dive in?
Read on for 7 key suggestions for better financial security in 2021.
1. What Are Your Financial Goals?
Some people call this “investing in yourself,” but you don’t have to spend any money to do so. You just have to carve out a little time to sit down and get real with yourself.
The first step is all about establishing your financial goals. Do you want to place more money in savings? Is there debt that you’d like to eliminate?
The possibilities here are endless — and completely up to you.
How Are You Going to Get There?
Once you’ve established a few financial goals, the next step to take figuring out how you’re going to get there, which is where investing in yourself comes into play.
In 2020, Canadians experienced a lot of job losses, and some are still dealing with unemployment. The positive thing about this situation, though, is that it gives people more time to learn new skills and even start their own business.
With access to the internet, the chance to learn new things is endless, and so are the chances you have to invest in yourself. Whether it’s baking, coding, drawing, candle-making, or writing — investing in a certain skill could have a major impact on your financial security.
2. Keep Track of Everything
The next step to take is tracking everything. Again, however, the internet makes this step easy.
Whether you download an app or prefer to do everything manually with a financial tracking worksheet, tracking everything that enters and leaves your account every month is a fantastic way to keep track of your financial security.
3. Live Within Your Means
Once you’ve tracked everything for at least a few weeks (or looked back at past expenses), it’s time to see where you may or may not be able to cut back.
Maybe you’re about to move and might find it better to live in a less expensive part of town or create a custom mortgage plan. You could also start biking or walking places instead of driving. Less drastic measures you can take include cutting back on takeout every week or cancelling a few of your monthly subscriptions.
Bottom line: If extra expenses are keeping you from financial security, it’s time to cut back until you get back on your feet.
4. Are You Debt-Free?
The answer to this question is not meant to draw fear out of you or even judgment. It’s simply to say that if you’re in any amount of debt, placing a special focus on it can help you reach financial security.
Once you’re tracked your finances and decided on anything you might be able to cut back on, it’s time to see what you can throw at your debt.
You shouldn’t drain your entire savings account for this, but you should see what you can afford to take out in the name of paying down debt. If the answer is none, just move back to the first step of seeing what extra money you can allocate towards it every month.
5. Create an Emergency Fund
Once you’ve completed all the other steps, it’s time to set up your emergency fund. Initially, all you need to do for this step is to decide how much is going to go into the emergency fund.
Ideally, your emergency fund is going to have 3-6 months’ worth of living expenses in it. This should also factor in pet bills, the cost of living for your kids, etc.
From there, just like you did to figure out how you can pay down your debt, you’re going to decide how you can fill up this emergency fund.
6. Start Budgeting
The next best thing you can do to reach financial security is to start budgeting. There are hundreds of apps available that can help you with this. You can also opt for a spreadsheet or old-fashioned pen and paper.
With whatever method you decide upon, make sure it’s easily accessible to you so it can be updated constantly. You’re going to include your monthly bills, living expenses, and even how much is going into savings, paying off debt, being put towards something, etc.
7. Look to Increase Your Income
The final step you can take toward better financial security is looking to increase your income.
Whether you do that by deciding to invest in yourself or taking up a side-hustle (like Uber, a grocery delivery person, or even a dog walker), increasing your income is going to wield quick results when it comes to financial security.
We know that this option isn’t available to everyone though, and it’s not a requirement to better your financial security — just a great option to think about.
Remember These Tips While You’re Working Toward Financial Security
Working toward financial security is often a time-consuming task that can feel never-ending, but it truly doesn’t have to be. Viewing this as a time for you to look towards your future with excitement instead of dread is a great way to make things easier on yourself.
In the end, that’s exactly what you’re doing. Working toward financial security is going to set you up for the future and ensure that there’s excitement there to be felt.
If you’re interested in the steps you can take towards a secure financial future, contact us today.