3 tips to make a fresh start financially
To put it to you lightly, the pandemic disrupted everyone’s lives. But, this give us a chance to make a fresh start, according to behavioral scientists. For example, we may never look at money the same again, especially in the case of emergencies.
If you’re looking to make a fresh start financially, here are three tips to help you out.
1 – What does your big picture look like?
For some people, the pandemic was extremely tough. People experienced job losses, pay cuts, or had family members that were negatively impacted. For some companies and industries, it was business as usual. No matter where you fell in, you want to have a good idea of what your big picture goals look like.
What do you want your life to look like? How much money will you need to reach your goals? Does your current job give you the resources to get there? Do you want to work remotely or in an office? How are your investments and retirement accounts?
These are the questions you need to ask yourself when trying to figure out the big picture moving forward.
2 – Review your spending habits
If you’ve experienced economic hardship, you’ll need to focus on how you are spending your money until things turn around for you. Setting a budget is always a good idea. You can use that budget to make intelligent decisions about how you spend your money.
For example, are you still spending a lot of your money on delivery services for groceries, meals and other items? Is it time to cut back on those services if you are stretched financially?
By reviewing your spending and setting a budget, you can answer those questions in a way that will be most beneficial to your financial health.
3 – Start or replenish your emergency fund
Financial planners would advise saving six months’ worth of salary for your emergency fund in the past. Not anymore. Lockdowns, job losses, furloughs, and other events that can happen means you must save more now.
If possible, try to save one year’s worth of salary. That means you’ll be covered when you have emergency expenses or potentially a long-term disruption in your ability to earn.
If you’re going to be commuting in 2021, it also makes sense to save money on your taxes with commuter benefits. You’ll be able to save $270 tax-free per month for your commute on mass transit, qualified parking costs, or rideshares. Employers can also pay less on payroll tax the more people who enroll. For example, they’ll save $40 per month for each employee who participates and can save $24,000 annually if 50 employees participate.
For more information, schedule a meeting with us.