7 Habits to Build Financial Confidence and Stability in 2021

COVID-19 and the financial recession of 2020 prompted many to change how they handled their money and form new spending habits due to economic hardship. As society recovers from unemployment and job loss, as well as the temporary halting of entire industries, take the initiative to put yourself in a better financial situation in 2021. Here are 8 good financial habits to form in 2021 to make this year more stable, and give you more confidence as you prepare for what is to come.

#1 Commit to a Budget

Economic losses from COVID-19 forced many to make drastic spending cuts in the past year. Making a budget now can help you easily categorize your necessary expenses for the month or the year, as well as the non-necessary or discretionary expenses. As you factor your income into your necessary spending, the rest will be up to you to use or save. If you have been budgeting during the pandemic, consider the benefit of continuing to cut certain things out of your budget as society slowly begins to improve. Staying frugal, whatever your financial situation, will allow you to better manage your money to build savings and make wise spending choices. If you are intimidated by budgeting or you don’t know where to start with such a commitment, consider making a more flexible spending plan with more general guidelines to help you start becoming aware of where your money is going and how you can make better use of it.

#2 Build up an Emergency Fund

2020 showed us how easily our lives can crumble and our source of income and ability to find a job can be taken away. There is no better time than now to start building up an emergency fund to sustain you should difficult times come again. A helpful rule is to set aside money for savings every month before making any other discretionary spending decisions, maximizing the amount you can save from every paycheck instead of saving what is left over after spending. The common standard amount recommended for an emergency fund is typically around 3-6 months’ worth of expenses. While you can always deposit a greater amount and to be even more prepared, be careful not to overfill your emergency fund when you could be putting some of that money towards a retirement plan or a high-interest account.

#3 Tackle Debt and Poor Credit

As you make your budgeting plan for 2021, include a game plan to tackle any debt you have with a realistic timeline. Debt can be crippling, don’t wait to pay it off or pay the bare minimum or you will have to deal with it for much longer than you like. Instead, make 2021 the year to get serious about eliminating debt, whether it’s from student loans, credit cards, or another reason. In the same vein, have a goal of improving your credit score, which will only bring benefits and open up more financial opportunities for you. You can accomplish this with strategies such as keeping up with all of your bills, paying your credit card in full every month, and tracking and reviewing your credit reports and usage often.

#4 Automate Your Finances

Today, missed payments can easily become a thing of the past with automated systems dominating the world of electronic payment. Worry less about forgotten payments by setting up recurring payments on the necessities in your life, from credit cards to phone bills to debt payments and more. Make it easier on yourself and your budgeting through more reliable and consistent automated payments.

#5 Make a Plan to Achieve Your Financial Goals

While it is still early in the year, decide what things you would specifically like to accomplish for yourself by the end or 2021. Whether your ultimate goal is to pay off debt, finance for a house, or budget for insurance policies, make a list of all the steps you will need to take in order to accomplish those goals by the end of this year. Striving for and putting your efforts towards that goal now will make it easier to maintain those practices and keep them in mind as you continue through the year and make other financial decisions

#6 Contribute to a Retirement Fund

You should start thinking about setting up a retirement fund as early as your 20s, whether it’s an employer-sponsored plan such as a 401(k) or an individual retirement account (IRA). The younger you are, the more time you have to build up a sizable amount of funds to use for a comfortable and secure future retirement.

#7 Purchase a Life Insurance Policy

We are well aware that there is no way of knowing what will happen this year or even tomorrow. You can give the best financial protection to your loved ones with life insurance, as , especially for those who are married or have dependents. Life insurance gives you peace of mind and financial security with the guarantee of a payout if something were ever to happen to you. With many options for policies, term insurance is the most common and affordable in which you pay a premium every month for a set term, usually around 10-20 years. While life insurance can sometimes be more affordable than you think, the younger and healthier you are, the better rates you will receive.

Get Started with LifeQuote

This year, don’t wait to protect your family from financial hardship in the future and consider how life insurance can provide security in a time of uncertainty. At LifeQuote, find the answers to your questions through our expert information from rates by age, to insurance types, to no-exam policies, and more. Speak to one of our agents today to get started on a life insurance plan suited to your needs, or try out our free quote generator to receive a personalized quote instantly. Achieving financial stability this year may be easier than you thought and will give you the assurance you need to move forward with confidence.