2021 is an excellent year to start making better financial decisions. As communities and countries recover from the pandemic-stricken 2020, most industries have fortified their financial practices to improve their profits in the coming years.

You will benefit from buffing your finances, whether you’re a homemaker or business person. PT Unified Jakarta Review that having better money skills will help you survive calamities and secure your family’s future.

Here are some of the financial tips for 2021:

Create a Budget

The first financial tip is creating a fixed budget for your expenses. You don’t have to be strict about the amounts, and you can use estimates for the figures. According to PT Unified Jakarta Review, the key to a reasonable and adequate budget is honesty about you and your family’s financial capabilities.

Here are steps on how to devise your budget:

Prepare a spreadsheet such as Microsoft Excel or Google Sheets to organize your records.
Calculate your net income, which is your salary minus taxes and other deductions.
List down all your recurring expenses such as bills, loan payments, and others.
List down your short-term goals, such as saving for a trip, and long-term goals like buying a house or car.
Add allowance for groceries according to your usual monthly spending.

If you spend more than you earn, you should consider selling some of your unused clothing or household items. You can reduce your costs by cutting your extra subscriptions or taking care of your electricity consumption. You can also look for additional income, such as part-time jobs, to help with the expenses.

If you earn more than you spend, create a 50-30-20 scheme wherein you allocate 50% of your total income for needs or essential expenses, 30% for wants, and 20% for savings and debt repayment. If you’re debt-free, you can split 20% to 10% savings and 10% investments or insurance. Your savings can also double as an emergency fund.

Pay Off Your Debt

According to PT Unified Jakarta Review, one of the most important things to prioritize is your debt. You will have a more challenging time saving up if you have recurring interest payments. You should settle your loans and debts to start living a financially healthy lifestyle.

First, you should list down details of all your debts in a spreadsheet. Add details like the date borrowed, the interest rate, and the remaining balance. Every payday, you give the minimum expected payment on all the accounts then do any of the two methods:

Avalanche method – prioritize additional payments on the one with the higher interest rate so that it’s settled quicker.
Snowball method – add extra on the one with the smallest remaining balance so that it’s paid swifter.

Once you settle all your debts, you can start saving up.

Conclusion

There are many ways to earn financial freedom, and you can start doing them in 2021. Sometimes, it’s not about how much you make but how efficiently you can manage your income. Never resort to loans unless you’re sure that you can keep up with the monthly payments, including interest.