Goodbye (Finally) to 2020! 7 Financial Moves to Make 2021 Less Stressful

With less than 2 weeks left on the calendar,  we're sure that everyone is ready to say "goodbye" to 2020 and start fresh in 2021. From the coronavirus pandemic to economic shut downs and uncertainty about the future, it's been a stressful year, full of adjustments and financial strain for many of you.

If you are looking to start 2021 on a better financial note, these 7 moves will (hopefully) help make the upcoming year less stressful. 

Financial Move #1: Spend Less, Reduce Stress

Make your 2021 mantra an easy one: spend less, reduce stress. Before you buy, ask yourself "will this actually improve the quality of my life?". If the answer is "no" or if it will just add clutter to your home (which can also add stress) then skip the purchase.  

You can start small, by doing things such as:

• Foregoing your morning latte and brewing a pot of coffee or tea at home instead
• Cooking at home rather than relying on restaurant deliveries or eating out
• Eliminating your cable tv service and streaming your favorite shows instead
• Comparison shopping to find that less expensive phone plan
• Giving up your gym membership, and walking/running outdoors or exercising at home instead
• Waiting a few days and really considering each purchase to limit impulse spending 

It may be that you're already spending less this year due to the pandemic, so that "must haves" do not have the same importance they had pre-pandemic.  Taking small steps, like those listed above, can become a lifestyle change - something that you can incorporate into your everyday life. 

Financial Move #2: Reduce Debt

Getting rid of, or at least reducing, your credit card debt can relieve an immense amount of financial stress. Start by paying off the credit cards that have the highest interest rate before working your way down the line to lower-interest loans.  

Financial Move #3: Track Expenses

If you track exactly where your money is going, it will give you a better idea of your overall household financial situation.  Simply understanding where your money is going can help you to really own it, which in turn, can start to reduce financial stress.  End -of- year credit card summaries and your check register are useful tools to track expenses.  People dramatically underestimate what they spend when relying purely on their memory.  

Financial Move #4: Trade “Stuff” for Experiences

While you are still spending money here, research shows that people enjoy experiences more than possessions, so this is a great way to make better use of our money. Rather than buying a new outfit, you could spend your money on:

• Cooking classes 
• Traveling (when safe to do so)
• Art classes
• Spending more time with friends and family, while socially distancing

Whatever it may be, this will prevent stress and burnout while providing you with positive memories. 

Financial Move #5: Read Financial Success Stories 

Simply reading success stories is a great way to change your mindset when it comes to a healthier financial lifestyle. If you read about people who have been in your situation and were able to pay off debt, start earning more money or just overcome some type of financial hardship, then you can become inspired and start to implement these tactics into your own life. 

Financial Move #6: Create an Emergency Fund

It can be difficult to comprehend creating an emergency fund when you are already financially stressed. But whenever you can, put any extra money aside at the end of the month into an emergency fund for unexpected expenses, such as house and car repairs or healthcare costs. 

Financial Move #7: Start a Spending Plan

Once you’ve worked diligently to reduce debt and build an emergency fund, start a spending plan. When you do this, you’ll need to track your income while making a plan for all that you are earning. You can prioritize your spending once you have allocated the funds to cover expenses. This should hopefully help you breathe a little easier as you spend money while staying on track.

2020 has been hard on everyone - personally, professionally and financially. As we prepare for the upcoming year, use these tips to help reduce financial stress as we all work towards a better year.