A lot of people look at the beginning of a new year as a sort of reset button on everything they did last year, every mistake, every failure, and every unreached goal. This is especially true for 2020.
If you have had a so-so year finance-wise, and are looking to press that red ‘reset’ button, then the best way to do that is through the use of financial tools.
Financial management has been made as easy as downloading an app and using it daily in the 21st century. There are many financial planning tools, most of them free, that you can start today (why wait until 2021) to start improving your finances.
Finances are a big chunk of what worries most individuals and families. In fact, 77% of Americans, when surveyed, reported that they were feeling anxious about their financial situation. That’s one-third of the American population!
It doesn’t have to be this way. Let’s look at some financial planning tools that you can take advantage of starting today, so your 2021 can be worry-free, at least about your finances.
- Budget Spreadsheets
Do you know what your monthly spending is? Do you want to know? It could be the case that you are so afraid of how much you are spending each month that you actually want to bury your head in the sand and pretend like everything is fine.
Far from reducing worry, this kind of ‘non-planning’ attitude actually increases fear, doubt, and anxiety. The best way to deal with this is to have some sort of spreadsheet on Excel or Google sheets, that tracks your monthly budget.
Set up ‘envelopes’ for each area of your budget. For example, you can have a certain budget for your monthly rent or mortgage expenses, your daily coffee intake, your monthly groceries, and so on.
Stick to the monthly budget goal for each item, once you have it set. Do not deviate too much from it. You can also use a financial wellness platform to gauge the state of your finances.
- Know Your Net Worth
Net worth is the amount that you get after subtracting all your liabilities (credit card debt, mortgage, etc), from your assets. This net worth number is a good number to know because it will help you track whether you are on an upward trend. Or not.
This way you can make adjustments as the months pass by, to ensure that your net worth keeps on increasing on a monthly and yearly basis. You want to be better off at the end of 2021, then the beginning.
- Debt Snowballer
If you have any kind of debt, that’s always one of the main causes of anxiety. Use some sort of debt snowballer app or you can create something in a spreadsheet, where you put in a bit of your disposable income to paying off your debt monthly.
This is a great way to pay off your debt because you can see the number decreasing every month, which will give you great relief from financial anxiety.
- Record Your Daily Expenses
Write down everything that you spend in a day, every day. Everything means everything. If you spent 25 cents on a shopping cart at the grocery store, write that down, and tally up your daily expenses to see how much you are spending.
This will give you an idea of the loopholes and drains in your finances, so you can fix them.
- Track Your Credit Score
If you have no idea what your credit score is, that can be a huge problem when it comes to getting a new credit card, or a mortgage. A great credit score is an essential part of any financial management. It’s easy to find your score online.
Once you know your score, keep on monitoring it monthly to keep an eye on it so any fluctuations that might occur can be corrected right away.
- Invest for Retirement (Even $25 a Week Helps)
In 2020, 62% of Americans said they are worried about retirement and this number keeps on growing every year. Use the automatic withdrawal system with your employer or your bank, and set up $25 weekly payments into your 401K.
Set it and forget it, should be your motto with regards to financial planning tools.
- Set up Automatic Payments
Financial tools are nothing if you don’t end up using them. That’s why the best way to keep on top of your finances is to automate as much of it as possible. Why do you sit down every month and pay your credit card and mortgage bills?
Automate it all, so you never miss a payment, and never have to be worry about late charges, or extra interest payments.
If you are worried about untoward charges on your credit cards, then make sure you check up on your credit card transactions at least once a week. Or set it up so that your credit card emails you whenever there is a transaction.
- Use Your Bank’s App Daily
Have you even downloaded your bank’s app yet? You pay enough monies to your bank to be allowed to store your money with them. Why pay them extra for late fees and overdrafts?
Download your bank’s app and then check it daily or 2-3 times a week, to ensure that your bank’s account is in good standing, and there’s nothing shoddy going on.
This will ease a lot of your anxiety, especially if you are the kind of person who lives paycheque to paycheque or likes to keep a low balance in your chequing account.
Financial Tools Can Help Ease Your Financial Future Anxiety
There are dozens of other financial tools that you could use to manage your finances, but start slow and go from there.
As you learn more about financial management, you will realize which tools are conducive to financial help, and which aren’t.
Don’t procrastinate and start now, to plan for your bright financial future in 2021 and beyond.
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