The start of a new year is a great time to clean up your financial habits. The start of a new year is a great time to clean up your financial habits.
Finance Your Budget Financial resolutions: Seven ways to be more money savvy in 2021 Updated:

Financial resolutions: Seven ways to be more money savvy in 2021

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You might want 2021 to be the year in which you eat healthier, learn a new skill or land the job of your dreams.

But it’s also an opportunity to ditch your bad money habits.

One in five households relying on wages or a salary couldn’t raise $2000 within a week for an emergency, according to recent figures from the Australian Bureau of Statistics.

Financial planner Cameron Howlett said the global pandemic has highlighted that people often don’t financially prepare for the unexpected, like ill health or losing their job.

“People think that money will last forever and that’s not the case; when it’s gone, it’s gone.”

The first step to get your money in order may sound obvious but most people don’t do it: Examine exactly how and where you spend your money over a year.

Most people underestimate their actual spending by 50 per cent, Mr Howlett said.

“People are spending much more than what they think,” he said.

Look over last year’s bank statements and work out how much you spent on categories like food, transport and entertainment.

Next, allocate each spending category a set annual amount and download one of the mobile phone apps that track spending, to help keep your purchases in check and work towards your savings target.

“The micro becomes the macro, as long as you keep at it,” Mr Howlett said.

He said having a meaningful end goal in mind, whether it be saving for a house, car, holiday or something else that is important to you, is the key to staying within your budget.

Going through your bank statements and drawing up a budget is a good place to start. Photo: TND

Seven ways to be more money savvy in 2021

  1. Use a spending app on your mobile phone to track how much you spend in each category – MoneyBrilliant and Goodbudget are just some examples. Give each category a yearly spending allocation, which can be broken down into a weekly amount. Then regularly review if you are staying on target
  2. Enlist the help of a partner, friend or family member, who is also trying to save money, to be your accountability buddy when it comes to sticking to your budget and savings goal for 2021
  3. Get a better deal on your mortgage, either by refinancing with another institution or by getting a quote you can take back to your current bank to match. It might take a bit of effort but you stand to save thousands of dollars in interest payments
  4. Get savvy with how you run your food budget. Meal planning reduces the temptation to order pricey takeaway when you are tired and can’t think of what to cook. Shopping online with a set ingredients list cuts back on travel expenses to the supermarket, helps you avoid impulse purchases, and lets you take things that you really don’t need out of your shopping basket with the click of a button
  5. Run your electric appliances, such as the dishwasher, during off-peak times when power is cheaper and check if your provider has an app to help you track consumption
  6. The new year is a good time to do an audit of your belongings and donate or sell what you don’t use on platforms such as eBay, Facebook Marketplace or Gumtree. You could have hundreds, if not thousands, of dollars worth of items you could easily turn into cash
  7. Some savings accounts let you round up your transactions to the nearest $1 or $5 and deposit the difference. So, if your morning coffee costs $4.50, you will be debited $5 and 50 cents will be sent to your savings account. These small savings with each transaction can add up to a significant amount over the course of a year.