Top 7 Personal Finance Tips for 2021: Many do not even try to save savings, referring to small incomes. Meanwhile, the secret to successful personal finance management lies in the ability to control your expenses. Experts will advise how to achieve this.
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The Top 7 Personal Finance Tips for 2021 Are:
1. Estimate your net worth.
The best way to calculate your net worth is to value your property and calculate your debts.
Add up the value of everything you, savings, retirement and property and car valuables, valuables like art and jewelry, and more. These are your assets. Then, assess all of your debts – be it a mortgage, car loan, consumer loan, or credit card debt. Add them up and subtract them from your total assets. This will be your net worth – whatever you have.
If your net worth is positive, don’t relax. Maintaining this consistently requires discipline and cost control. If your net worth is negative, don’t panic. This is not a verdict, but simply the current situation that can and should be changed. You should work harder, save more, spend less, and pay more debt.
2. Maintain a budget.
It’s quite simple to make a financial plan. You simply need to make a rundown of every one of your costs and payments. This rundown will help you center around your monetary objectives – regardless of whether it’s spending all the more astutely, reimbursing an advance or credit, putting something aside for possibilities, or retirement.
On one piece of paper, record the entirety of your month-to-month pay – pay, benefits, divorce settlement, or venture pay. On another sheet, begin recording your costs. This is, obviously, more troublesome, since you need to monitor all costs, even little ones.
Start with the basic, biggest costs: mortgage, car, kids, utilities, groceries, whatever debt payments you need to make. Your main expenses should be at the top of the list. Then list your secondary expenses – activities like fitness and clothing, entertainment, restaurants, and movies. Budgeting will allow you to more clearly define where your money is going.
According to Maxim Biryukov, senior analyst at Alfa Capital, a tool as simple as keeping a budget can work wonders for those accustomed to uncontrolled spending. “Basic cost accounting often allows you to take a fresh look at your expenses, think about their needs and value. The new-look will help you avoid unnecessary costs without compromising your quality of life. “
3. Bring expenses in line with income.
To live inside your methods, you need to adhere to a spending plan. If you can’t handle your little costs, follow the alleged procedure of “restricting required costs to 60% of complete payment.”
Compulsory costs incorporate food, clothing, family expenses, protection charges, repeating charges (Mastercard, credits, vehicle and lodging installments), and all duties. If your mandatory costs represent over 60% of your pay, you should cut some of them.
The remaining 40% of your income should be divided into four parts: set aside 10% for retirement savings, 10% for long-term savings (for example, a down payment on a house), 10% for any savings you may need. for unforeseen expenses and 10% – for “interests and entertainment.”
Natalya Alymova, senior vice president of Sberbank, head of the Capital Management Unit, advises starting to save 10-15% of monthly income. “This amount will provide a comfortable saving mode without changing the usual standard of living,” Natalya Alymova is sure.
4. Review your expenses.
Revaluation of expenses will help to significantly reduce expenses and increase savings. Review all of your expense items. Surely you will find some that you could easily do without. For example, you may well opt-out of your cable TV subscription (at least temporarily) or reduce the number of visits to restaurants and cafes. It may be worth changing your fitness club membership for a cheaper one. You can also review the terms of other banks and refinance (if you have a loan). Try walking more and reducing travel costs.
Andrey Kochetkov from Otkritie Broker is confident that even food costs can be reduced without much damage. “Most Russians spend money on food. Excessive spending on food often leads to inefficient use of products. Meanwhile, organizing meals according to a more dietary scheme using recipes for steaming or in a multicooker can save not only money but also health, ”the expert says.
5. Reduce your wish list.
On the off chance that you truly choose to begin saving and increment your reserve funds, you should forfeit a portion of your cravings. Survey your rundown of costs related to purchasing another pair of shoes or another coat. Maybe it merits forgetting for some time about an old dream – to change the vehicle for another one or by and by going to the ocean. It’s dependent upon you, yet recollect that by saving today, you are making a springboard for a good tomorrow. So specialists say.
Andrey Kochetkov believes that you shouldn’t chase new gadgets every year. Modern mobile devices remain functional not only after six months of use but also after one and a half.
“Recently, the trends of the economy and even minimalism have been extremely popular: people on the Internet publicly live“ years without shopping, ”restrict consumption and try to find the optimal balance between their own needs now and ensuring their future. It is impossible to provide consistent guidance for all. Constant self-restraint suits someone, but it will make someone deeply unhappy. You can use any saving methods that do not irritate you, ”says Valentina Savenkova, head of the Veles Academy training centre.
6. Protect yourself from impulse purchases.
Stay away from imprudent shopping. This is a surefire approach to spend more than your financial plan, and generally on pointless things. Monetary master Tom Watts calls indiscreet shopping “spending at Amazon” and prompts killing web-based media essentially briefly.
According to a study by the brokerage company Fidelity, about 63% of Americans surveyed believe that social networks negatively affect their financial condition. According to the Allianz Life Insurance Company, more than half of North American millennials make unplanned purchases after seeing ads on social media. And nearly 40% of young people shop on credit to keep up with their peers, according to a Credit Karma report.
7. Go on a “Cash diet” right now
Change your lifestyle now without delay. Beginning in January, go on a “Cash diet” that will save you thousands of dollars over a year, experts recommend.
Put your credit cards in a drawer and promise to only spend the money you have on hand. If you do intend to make a purchase with a credit card, then make sure that you can get the money back on the credit card during the grace period – otherwise, the purchase price will increase.
According to Andrey Kochetkov from Otkritie Broker, it is not obvious to many people that large expenses or purchases require long-term planning. “Especially considering that there is always an opportunity to take out a loan. But such an opportunity leads to significant overpayments, ”the analyst reminds.
“The most important advice for those who want to start saving is: just start doing it,” says Natalya Alymova, vice president of Sberbank.