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2021 Financial PlanSharing my 2021 personal finance plan to get yourselves ready for the worst scenarios and have your money work for you.
(Note that this is a PERSONAL finance plan. Everyone's situations are different adjust accordingly based on your lifestyle!)
1. Do you have a regular source of income? Allocate!
This year I plan to do a 50-20-10-20 with my regular day job salary. That is: 50% needs/wants, 20% savings, 10% investment and 20% debt.
If you don't have debt, you can tweak this allocation. I personally have quite a few +
This year I plan to do a 50-20-10-20 with my regular day job salary. That is: 50% needs/wants, 20% savings, 10% investment and 20% debt.
If you don't have debt, you can tweak this allocation. I personally have quite a few +
high interest bearing debts so I need to allocate a substantial percentage to it until I can fully pay it off.
Which brings me to my next point.
Which brings me to my next point.
2. Pay off high interest bearing loans (credit cards!) and manage CC use.
Always PAY credit card bills on time. 3.5% etc interest may not seem like a lot but interest is being compounded + other fees when you don't get to pay your dues on time. Do not make your money bleed!
Always PAY credit card bills on time. 3.5% etc interest may not seem like a lot but interest is being compounded + other fees when you don't get to pay your dues on time. Do not make your money bleed!
Also, I will start avoiding credit card when I can. I realized it's much harder to assess my financial outflow when I use credit card because I do not see actual money running out in real time and I end up spending more than I should.
I'll try to allocate 10-20% of my salary +
I'll try to allocate 10-20% of my salary +
+ for purchases I couldn't do in cash. That means that percentage of my salary goes into paying my card.
3. Build, build, build your Emergency Fund.
When shit hit the fan during the pandemic, it made me realize what I would have done if i got laid off at work if my job was a very vulnerable sector. I had too little savings I probably wouldn't even be able to last a month.
When shit hit the fan during the pandemic, it made me realize what I would have done if i got laid off at work if my job was a very vulnerable sector. I had too little savings I probably wouldn't even be able to last a month.
How much money to get in your EF is highly dependent on your lifestyle. EF is usually equivalent to a certain months worth of expenses.
I'm personally aiming for 6 months worth of EF, but you can always start at 3 and work your way up.
I'm personally aiming for 6 months worth of EF, but you can always start at 3 and work your way up.
Also your EF should be liquid which means it is money that you should be able to easily get when another shit hits the fan.
I personally keep my EF at digital banks that yield high interest than normal banks because hey, why not earn more money while keeping it?
I personally keep my EF at digital banks that yield high interest than normal banks because hey, why not earn more money while keeping it?
4. Have more than one source of income!
I've had too much time to spare and I realized I could make that time more productive AND earn money while I'm at it.
So I'm currently a freelancer somewhere! Its the only thing I've done right at the start of 2021. BLESS.
I've had too much time to spare and I realized I could make that time more productive AND earn money while I'm at it.
So I'm currently a freelancer somewhere! Its the only thing I've done right at the start of 2021. BLESS.
5. AND WHEN ALL IS SAID AND DONE: Invest!
Ok, this isnt really applicable to everyone but read along if you're interested.
I've done stock trading before and stopped because I really didnt take it seriously, but I plan to change that this year.
Ok, this isnt really applicable to everyone but read along if you're interested.
I've done stock trading before and stopped because I really didnt take it seriously, but I plan to change that this year.
If you have extra money lying down (do NOT touch your EF) consider investing/trading in the stock market. Ofcourse, remember to trade at your own risk. The stock market is a high risk, high return industry, so only use money that you can afford to lose.
I personally learned that the banks are not the best place to keep extra money that you don't really need to use at the moment.
Ofcourse investing takes a lot of research, so be well prepared before venturing into the stock market so you don't lose more than you earn.
Ofcourse investing takes a lot of research, so be well prepared before venturing into the stock market so you don't lose more than you earn.
I realized I forgot to close out this thread, so! Don't forget that it's never too late to start financial planning. It may seem like a tedious task but it can save you a lot of trouble in the future + making it a habit early on in life will make you a smarter saver and spender.
