10 Tips To Help Improve Your Financial Situation In 2021

10 Tips To Help Improve Your Financial Situation In 2021

We share some of the most helpful tips from the experts. These tip will help you set financial goals, plan your spending and audit your income and expenditure.

Many things in life are beyond our control, but we can choose how we react to them. We think that’s about what US presidential candidate Hillary Clinton once said. Now her quote is more relevant than ever: the covid agenda increases the level of personal stress amid global economic challenges. It also causes anxiety about our well-being in the new year for each of us. So we decided to share some smart tricks for getting your wallet in order and changing your life for the better in 2021.

Each of us can minimize the risk of bankruptcy and tangibly improve our financial situation even in the current circumstances. To do this, all you need to do is submit your lifestyle to a few rules, such as planning. Planning is like riding a bicycle. You can tilt your head down, concentrate on small obstacles, and end up crashing into a tree. Or you can overcome your fear, lift your eyes and see not only the destination but also the road that leads to the goal.

Setting long-term goals

10 Tips To Help Improve Your Financial Situation In 2021

At first glance, it seems silly to set financial goals for 5-7 years from today. The threat of lockdown hangs over us, Covid is a threat, and the mood at work is depressing without the festive aroma of an annual bonus. But global goals are global because they have little bearing on what is happening today.

You have to plan thoroughly and very clearly. For example, not “I want to live in a beautiful house in the suburbs of London in 10 years”, but “I will buy a 2-bedroom flat in Brandon Estate housing estate, for which I have to earn 135600$ USD, within ten years”. Seeing a concrete deadline and concrete figures, we start taking small steps in the right direction: to get trained in a better paying profession, to start investing in the stock market, or at least to refuse to buy a Gucci bag for the benefit of the first installment on the mortgage.

Planning your spending

10 Tips To Help Improve Your Financial Situation In 2021

The emotions of spontaneous purchases are the most pleasant but short-lived. How else would you explain the fact that each of us has a small cemetery of unworn clothes in our wardrobes? Or boxes of trinkets and souvenirs that can never have any use.

What should we do:

  1. Assemble your wardrobe with the basics of items that fit you perfectly.
  2. Buy only when you have to.
  3. Make a shopping list ahead of time and don’t shop above target prices
  4. Don’t just buy what you don’t want, but return to the shop after a couple of days.

The sale is a special word. It’s the word that makes your heart beat faster. But discounts are just a marketing trick to make us pay more. So keep an eye on prices and don’t get caught up in the excitement.

Recording income and expenses

10 Tips To Help Improve Your Financial Situation In 2021

Keeping track of your spending and income is as essential to improving your financial situation as keeping track of the number of steps you take when you want to get in shape. It can be boring, but as a bonus, you won’t find yourself without money.

Expenses need to be divided into compulsory and optional. Obligatory or fixed costs are those that you pay regularly and without much change, e.g. groceries, mobile phone bills, utility bills, mortgage, taxes, etc. Non-obligatory or not fixed costs are expenses that you have to pay occasionally, such as buying gifts for birthdays.

The easiest way to keep track is to subtract fixed costs from your total monthly income and allocate the rest among possible temporary expenses or leave some money for a rainy day. With this approach, you will always have a positive balance in your account and you will be able to consciously manage your expenses. For example, if you have spent more than you planned on gifts, you may choose not to go to the massage therapist.

You can keep track of your expenses and income in any way you like, for example:

  1. In a note-taking application such as OneNote, Evernote, or Notion.
  2. Excel spreadsheets
  3. Personal diary

Read- The Da Vinci Method: Program Yourself To Success

Controlling automatic spending

Automatic subscription or renewal services for goods and services are convenient in that you don’t have to spend time each month choosing and paying for them. However, it’s essential to periodically review the auto-pay services you’ve purchased and cancel those that are no longer needed. Maybe Beautybox from Lookfantastic is no longer of interest, but you forget to cancel your subscription and keep getting boxes of inappropriate cosmetics.

Every 6-12 months we should check, cancel or choose the best rate:

  1. for paid mobile apps
  2. Internet service providers
  3. mobile network operators
  4. transport companies
  5. insurance companies

Checking up on banking products

We get used to using the same bank and services, although better products and services are constantly appearing.

We should check once a year or more often:

  1. fees, commissions, and interest rates for debit and credit cards
  2. bank card maintenance fee
  3. SMS notification fees
  4. cashback terms
  5. grace period for credit cards
  6. old bank cards and fees that may be charged on them, credit cards with potentially outstanding credit

Getting a tax deduction

A tax deduction is the amount of tax you are allowed to pay back for certain purchases over the past three years. The state refunds 13% of the cost of payments, such as school fees or medical treatment, life insurance services, charitable contributions, or investments(varies from country to country). You can also get a refund for the tax paid on the purchase of a flat, even if you bought the flat 10 years ago. Only those who have paid personal income tax (PIT), such as those who are formally employed, may claim a tax deduction.

To apply for a tax deduction, you will need to collect documents that prove you have made a purchase. This includes receipts and licenses from organizations where money has been spent. Detailed instructions on how to claim a tax deduction can be found on the official website.

Refinancing loans

Not many people know that the interest on a loan can be reduced by refinancing. This means that we take out a loan with more favourable conditions and use these funds to close a loan with a high interest rate. With the right approach refinancing can ease the burden of credit and save money.

To refinance you will have to go to another bank and take out a new loan, subject to the following conditions:

  1. The remaining term on the old loan must be at least one year
  2. The difference in interest rates between the old and the new loan must be at least 1 per cent
  3. it is best to refinance a mortgage loan in the first 3-5 years, when the loan interest is paid back