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Creating a budget for the new year
8th January 2021
2020 was undoubtedly one of the most unexpected years most of us can or will ever remember. Some of us will really struggle to leave our hardships in 2020 and start 2021 with a fresh financial start. The reality is, 2021 doesn’t need to be half as hard as 2020 - we can learn from this year and use it to create financial stability and budgets for this year.
We at Dot Dot Loans are here for you, and believe in overcoming hardships stronger, more efficient and more experienced for whatever this year may throw at us.
There are many ways we can get prepared and truly financially recover. Whether you have been put on furlough, been made redundant, have to re-mortgage, are worrying about rent, are worrying about loans, have to support family or any other stress that may have come your way this year.
The most effective way to overcome these challenges is to create a budget. This is a comprehensive picture of all your finances, goals and strategies to achieve your financial aims. Here are 5 main benefits of creating a budget for 2021:
Correctly Manage Cash Flow
Things may be a little tighter, and your pockets may be a little shallower this year, which is completely understandable. However, it is now more important than ever that you are correctly and honestly managing your cash flow, and ensuring you are completely satisfied with your outgoings and incomings.
Achieve Personal Goals
Creating a budget will allow you to highlight your spending. For example, setting aside a weekly amount for food shopping. The first step of saving for whatever it is you might want is identifying what you have now - and how you can save as much as possible to get to where you want to be, and how long this might take.
Understand What You Can Afford
Looking at your statements and spending can be daunting and create a range of emotions. However, this is necessary for helping you decide where to spend your money and what you can truly afford. For example, it could make more sense to do a bigger supermarket shop instead of ordering a takeaway once a week.
Plan for the Future
Right now, it may be difficult to look past everything we’re going through. That perfect trip to the Caribbean may be looking more and more impossible.
It is important to remember, though, that no matter how bad things, they will get better! Soon we may be able to travel, and all those postponed weddings will surely take place at some point. So, think of the future and bear in mind that we may be hitting the play button again shortly.
Secure Your Retirement
Now more than ever we are confronted with the fact that anything can happen - we may be secure one day and insecure the next. Although retirement plans may be something that seems a lifetime away, putting a little away frequently is much easier to handle than having to store large chunks away in the future. Ensuring we have something to fall back on couldn’t be more important now.
If you are struggling with creating your budget, do not worry, this can be difficult if you’ve never looked at your finances in a critical way before. You can find out more at The Money Advice Service to assist you in your financial journey for the new year.
