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Looking to make a 2021 financial resolution? Here are some ideas

2020 was a difficult year financially for many of us. Here are some easy money resolutions for 2021 to better balance your budget.

A Magnify Money survey found 51% of Americans will make a money resolution for 2021. The top three include reducing debt, raising credit scores and increasing savings.

Pamela Capalad and Dyalekt Kushner both teach financial literacy for Pockets Change.

“We’re, like, very married,” Capalad said. 

They may share a life, but they do not necessarily share the same philosophy about money. Yet there is one financial goal they agree on when it comes to paying debt or saving.

“We are always in the mindset that you should build up your savings first, no matter what. Because what ends up happening is when people focus on paying down their debt or try to pay down their credit cards as fast as possible, but don’t have savings on the other side of it—(that) is when something unexpected happens. Which it probably will,” Capalad said. ”Just make the minimum payments for a little bit longer so that you can rebuild your savings.”

First, set up a place to save.

“Once you give yourself a place to save, you actually end up saving more money. You actually, say, ‘Oh, this windfall that I got, this tax refund that I got— now I have a place to put it,’” Capalad said. 

Consider getting a savings account at a different bank than your checking account.

“When I look at my bank account and I see my checking and my savings together, I’m like, 'Oh that’s how much money I have to spend.' Right?'” Capalad said. “So, if you separate your savings account from your checking account in terms of the institution, that makes a difference in terms of how you think about your savings, and when you can access it.”

Also, automate your savings.

“It doesn’t matter that you can only save $25 a month,” said Capalad. “The fact that you’re saving regularly is what matters. It’s not about having that big pile of money. It’s about identifying yourself as a saver. This is a habit that I just have.”

But where do you find the money? Financial expert Ryan Moore, with Kingman Financial Group, suggests cutting any recurring expenses that you can. You may have forgotten about the app you downloaded that charges $4.99 a month or the streaming account you no longer use.

“All those little bitty charges actually do add up, and then you magnify them by an entire year and there could be thousands of dollars that you’ve wasted because you weren’t paying close attention,” Moore said. 

Consider putting the additional money you get from any pay raises in 2021 toward savings.

“Put that money to work for you,” Moore advises. “You had a lot lesser income that you’ve become accustomed to living off of. Don’t necessarily change that habit. Take that extra money and stow it away.”

Next, make more than the minimum payment on your credit cards, if possible. Steven Dashiell is a credit card expert with Finder.com. He said paying even a bit more than the minimum will save you money long run.

“The minimum payment will always end up accruing interest on your account. and when you incur interest on your account, that compounds month over month,” Dashiell said. “So if you pay only the minimum balance, you’re going to start seeing your account just go up and up. Soon you’ll be underwater and it becomes much more difficult to pay off that balance.”

Setting even small financial goals for 2021 can mean a big payoff by the end of the year.

If you have a question for Eyewitness Wants To Know, email us at EWTK@kens5.com or call us at 210-377-8647.

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