Being unable to predict what will happen financially in 2021 means that you need to be prepared for anything. You can do this by making smart financial moves that will help you be ready to weather another storm – if one should come this year.
Get Your Taxes Filed Soon
The first step you need to take is to get your taxes ready to file. Collect all the information you need to fill out your tax forms and then file as soon as you can. This will let you know how much you owe the government or how large your tax return will be. If you owe money, you will have more time to get the amount you need.
Before you prepare your taxes, if you do them yourself, take time to learn about new laws from the IRS. These change from year-to-year, and because of COVID-19, you may have some new tax breaks and deductions. If you collected unemployment, remember that they are usually taxable.
Adjust Your Budget
If you do not already have a budget, you need to get one so that you can put more money into savings. Creating a budget and watching where every dime goes will reveal where you are wasting money on unnecessary purchases. Rethink your current bills and see if you can get the same services somewhere for less money. This may include memberships, insurance, medical, mortgage, utilities, food, car payments, etc. Eliminate the ones you do not need.
Establish an Emergency Fund
Because storms are completely unpredictable, you need to put some money aside in savings. As a goal for your emergency fund, you should save up enough money to equal six months to a year’s worth of bills. If you lose a job, have health problems, or die, there should be money for you and/or family members to pay the bills for at least one year. You want to be able to pay your regular bills, such as the mortgage or rent, insurance, income and property taxes, repairs on your car and home, and more.
Check Your Retirement Savings
When you have sufficient income, you need to add more money to your retirement plan when possible. This will ensure that you continue to have a significant amount of money to retire and to pay the taxes on that money without it affecting your living expenses at the time.
Invest in Yourself
Depending on what kind of job you have now, remember that many people found themselves either out of work or not getting enough work to stay afloat financially. To prevent this from happening, you need to consider taking time to learn something new that will make you either more attractive to your current employer (or to similar companies) or cross-train to be able to work in another field. Many online courses are free where you can learn almost anything. You could even use what you learn to start a side job and increase your income.
Determine where you want to be financially by the end of 2021 and beyond. Not having a goal will make it less likely that you will accomplish some of your dreams. Reaching toward a specific goal will help you at least get closer to it than you would otherwise. After setting a general goal for the year and the future, jot down some specific steps you need to take to reach that goal – then, get started.
Do you have any smart financial moves you’d like to share? Comment below.