Home finances in 2021 will continue to present new and difficult challenges, much like in 2020. The past 12 months haven’t been easy for anyone, homeowners being no exception, with money being tighter than ever with redundancies, furloughs, and reduced salaries being commonplace. As many will have discovered recently, getting finances in order isn’t just a logistical necessity but a happy bank account can also have a big impact on our mental health. To help you over the next several months, in this article, you will find a selection of tips and advice for those looking to master their finances during this strange time.
Rein in your spending
If you are working with a reduced income of late, reigning in your spending will be key until things are back to normal or your situation has improved. This is far easier said than done, however, as it’s very easy to grow accustomed to a certain lifestyle and spending habits. It’s important to make the effort, however, and show restraint by looking at ways that you can alter your daily, weekly and monthly outgoings. You can start small and limit or eliminate the number of takeaways you order and save money by cooking yourself. Why not analyse your car situation? Does your household really need two or three vehicles? Could you save money and with a little organisation minimise your household’s number of cars until times are easier?
For another option, Which? recommends ditching some of your bad habits as a way to save money and improve your lifestyle if one fell swoop: “Have you got any bad habits which are making a dent in your finances? According to new research by savings provider Hargreaves Lansdown, you could be over £4,000 better off by the end of next year if you choose to give them up.” So, think about your alcohol, smoking consumption and even things like unused gym memberships and pinch those pennies as they all add up.
Michael, from the financial blog Your Money Geek, has shared with us some great tips for little but effective ways in which we can reduce those outgoing bills at home: “One of the easiest hacks to save some money at home is to put your electronics on a power strip and turn the strip off when you are not using them. Devices like the TV, DVD players, and even gaming consoles like an Xbox all use electricity when not in use. The Xbox One, for example, uses over 15 watts continuously when in standby mode. Considering that’s just for one device; imagine how much your whole entertainment centre is then using.
“Likely you already have your expensive electronics plugged into a surge protector, so all you need to do to save some serious coin and help out the environment is power the surge protector off. On the off chance you don’t already use a surge protector, consider getting one so you can save your expensive electronics and save money on electricity.”
Esther, founder of the personal finance blog Money Nuggets, also has some excellent spending advice. Telling us that if you are shopping online for your home, to remember that vouchers and discount codes found online can make a significant impact: “When it comes to buying things for your home especially when making big purchases, always search for discount codes online before making any purchase. It’s not only big brands that offer discount codes but loads of other companies do too.
“You can search discounts codes for flooring and tiling, home accessories as well as plumbing and bathroom companies, and you could save money on things you had never thought of before. I saved over £100 on kitchenware from a small retailer just by finding a discount code online.”
Set savings goals
If you have been able to reduce your spending, you might have freed up some cash that can be tucked away into your savings account. Many of us start the year with great intentions when it comes to saving, only to fall off course and return to those old spending habits. Having some savings to fall back on, especially in times like these, is incredibly helpful and one of the best ways to stay on track is by setting yourself some savings goals. Finding a way to save is one of the top tips of Nick from the financial blog Pounds and Sense, and he has shared the following advice with us:
“Even though we are hopefully through the worst of the pandemic, we still face a very uncertain future. So, my advice would be to build up your financial reserves now, so you are in a good position to withstand any further crises and emergencies. I recommend a two-pronged approach. First, look for ways you can save on your outgoings, e.g. switching to a cheaper energy provider. And second, look for ways of boosting your income, e.g. starting a side hustle. A good initial target is to set aside six months’ worth of income and keep this in a readily accessible savings account.”
You can commit to putting a certain amount away each month and also try to have an end goal in mind for those savings as an incentive. As Nick says, part of your savings should be a safety net of sorts for tough times but perhaps you can also build towards a holiday once travel is possible again or save towards a few home improvements like ditching that old stairlift for a fancy new wheelchair lift. Whatever it might be, be strict with yourself, commit to your goals, and don’t touch those savings unless it’s absolutely necessary.
With all the different providers we rely on for utilities or services, it can be tempting to just stick with what you know and allow contracts to renew without much of a second thought. However, by doing so you can be missing out on some major savings by simply shopping around. As financial website The Money Pages informs: “A surprising amount of people fail to investigate their various options because they assume it will be too time-consuming.
“For example, 12.9 million households auto-renew their home insurance without shopping around for a cheaper alternative, assuming that it is easier to remain with their existing provider, as opposed to searching the internet for various different options.”
It doesn’t have to be a hassle to shop around, however, with the plethora of comparison websites available. Whether you want a change for your electricity, car insurance, or broadband, a simple search on a website like Compare the Market can present you with the best deals available. Further still, by simply telling your current provider that you don’t want to renew, they will sometimes offer you an attractive discount to just get you to stay.
Get on top of your debts
Don’t let your debts get the best of you. Do all that you can to stay on top of them rather than pretend they don’t exist. Limiting the amount of money you owe will be a weight off your shoulders and once you have paid it all off, you can move ahead with a fresh start, knowing that your money is your own. First things first, you should take steps to not make matters worse by not taking on more debt (put those credit cards away for the time being) and then prioritise what you currently owe. Get organised, document your finances, and work out what you owe to who and when you need to pay it by.
Website This is Money advises: “Take time to dissect finances and consider using free apps like Money Dashboard which can make it easier to work out where there is overspending and that could be used to pay off debt or could be saved. The priority should always be to pay your most important bills first, for example, housing costs. Then try to meet the minimum payment on every debt you have each month, to avoid default charges and the effect on your credit rating.”
Seek professional help if necessary
When it comes to finances, it’s important to remember that you don’t need to struggle alone. But beyond sharing the financial burden of running a household with a spouse, don’t be afraid of reaching out to someone for professional help. An accountant or financial planner can help get your finances in order, working out a plan of action for tackling debt, and offer advice for the short, medium, and long term. Further still, if you have savings goals, you can talk to them about the best options for you, introducing you to the world of investments – an attractive proposition for many right now when interest is so low. They’re also free services you can get in touch with like The Money Advice Service, which offer impartial money advice, helpful tools, and over the phone/online support.
2021 home finance tips
- Rein in your spending
- Set savings goals
- Shop around
- Get on top of your debts
- Seek professional help if necessary
We hope the tips above have been helpful. Finances are one of the leading causes of stress and at times like these, it’s important to get help whenever you can, have a plan of action, and a sensible mentality when it comes to spending. If you are looking for more financial education and tips, many of the websites linked to in this article will be great places to start.
For more of our own tips, guides, and advice, make sure to visit our news page.