The pandemic hit us hard in early 2020, and millions of people worldwide continue to suffer financially due to budget cuts. These cuts came from redundancies to millions of businesses being forced to close their doors for the last time.
While the pandemic is still active, many of us are adapting to a new way of life and beginning to rebuild our lives around this “new normal.” If the pandemic affected you financially in 2020, you may be looking at ways to overhaul your finances and work towards a life of financial freedom.
Great news! There is no better time than now to start making significant changes. I have put together a few fantastic ways to rebuild your finances in 2021, which range from big steps to tiny changes you can make – all of which will make a huge difference.
1. Take Advantage Of Payment Holidays
One of the best – and arguably the only – things to come out of the pandemic is the fact that mortgage and credit card companies have been extremely understanding during these difficult times. Many companies are offering payment holidays for mortgages and credit card repayments, and if your lender is offering this, take advantage of it!
It can be extremely stressful trying to find the money for repayments, especially if you’ve taken a hit to your finances over the last year. Take some time, rebuild your finances, and eliminate that stress while getting back on your feet. Even if it’s only for a month or two, the money you’d usually spend on these repayments can really help you straighten out your finances.
Keep in mind, this is not free money given to you but rather deferred payments that will be tacked on to the end of your loan.
2. Invest In Real Estate
This may seem like a bold move right now, but there’s a lot of money to be made investing in real estate. The truth is, real estate has always been – and always will be – needed, no matter what kind of crisis the world is going through.
As the population grows, the demands for properties will grow. Whether you choose to rent out a property, resell after renovation, lease to businesses, or rent out a vacation home is up to you. Depending on your property’s quality and location, you could make a very substantial side income that you can save for a rainy day.
The same applies to purchasing your own home. While it’s a bold move right now, you will thank yourself later. Owning your own home means you don’t have to worry about your landlord evicting you, not to mention you’ll be a step closer to financial freedom once your mortgage is paid off. If you’re able to put down a large enough deposit (at least 20%), you may be able to secure a mortgage repayment rate that’s lower than renting a property every month.
3. Eliminate Unnecessary Expenditures
We’re all guilty of signing up for services that are a waste of money. Things like a magazine subscription or an unused gym membership take cash out of your bank every month and simply aren’t worth it if you’re not using them. Take the time to go through your outgoing cash flow every month, and pick out any unnecessary expenditures that you could eliminate – even if only temporary.
It might not seem like much, but you could end up saving hundreds, possibly even thousands each year by cutting out the waste. You work too hard to be giving your money away. You may be surprised at how much you’re paying for things you don’t really need!
4. Become More Thrifty
Saving as much money as possible is essential right now, especially since many countries are still inducing nationwide lockdowns that could continue to reduce income. Unfortunately, at the moment, this kind of thing is still pretty unpredictable, and a great way to avoid being stuck financially is by being more thrifty with your spending.
Here are some great ways to get into the swing of thrifty-ness:
- Buy store brand products rather than big brands. For example, buying a store-brand Doritos will cost you much less than purchasing the actual brand. While sometimes it’s not worth sacrificing quality over price, you may be pleasantly surprised at how many products you can switch out for store-brand versions. Who knows, you may even enjoy them more!
- Buy clothes from charity shops (thrift stores) instead of retail outlets. Not only will you find real bargains on your clothing, but you’ll be helping out a charity too! Just remember to wash your new clothes before using them to stay on the safe side of the pandemic.
- Reuse, recycle and upcycle. Try and avoid throwing anything away that could be reused somewhere else. For example, instead of throwing your baby’s crib away, turn it into a fun desk where they can play and enjoy the furniture even longer. Doing this will also eliminate the need to buy new furniture.
- Cook meals in bulk and freeze them for a later date. More often than not, buying ingredients in bulk is much cheaper! To prevent food waste, you can cook meals in bulk and pop them in the freezer for a later date. This is also perfect for those times when you are too tired to cook after a long day (and it’ll prevent you from being tempted to order in!)
- Use some haggling skills and speak to your utility providers to talk your way into a cheaper deal. You’ll find that in most cases, they’re more than willing to do this to keep you as a customer.
- Walk instead of taking the car or bus to your destination. Not only are you saving money, but you’re helping the environment and getting exercise at the same time. Even if you only do this once or twice a week, you’ll begin to notice a difference in your bank account.
- Sell unwanted items. Nobody likes buying new if they don’t have to, and simply listing your items on Mercari, eBay or Facebook Marketplace could get you a quick sale and a nice amount of money in your back pocket.
- Similarly, buy second hand! Rather than shelling out your hard-earned cash for something new, try and find a second-hand version to save yourself some money and help with landfill waste.
- Clip coupons from newspapers and magazines. Even with the rise in financial technology, there are still stores that accept paper coupons to save money. However, if you’re like me, I prefer to use Rakuten and Honey to automatically save me money when I’m shopping online.
5. Keep An Eye On Your Credit Score
Going into debt isn’t going to help your credit score, but keeping an eye on your credit score can help you get out of debt. Luckily, there are free apps like Clearscore, which can help you track and manage the items on your credit. In addition to monitoring, many of these services will give you tips on how to quickly increase your score.
In most cases, these tips will help you climb your way out of debt, eliminate unnecessary spending, and help you become more aware of your finances. With Clearscore, it’s straightforward to understand what your score means and how you can improve it.
6. Decide If Insurance Is Right For You
It’s not unusual for things to break down from time to time, but unfortunately, this means you will need to quickly find the money for repairs. If an appliance breaks down or your boiler decides to call it quits, then you need to find a way to repair them as soon as possible.
I’m not fan of insurance in every situation, but there are times when it makes sense to get temporary insurance on that high dollar item that is on its last leg.
7. Sleep On Large Financial Decisions
Large costs will crop up from time to time; whether that’s needing to buy a new car, replacing an appliance that’s beyond repair, or anything else that might come up. A great tip is to sleep on big financial decisions and think about the pros and cons of spending that amount of money.
Could you cope without a car or that particular appliance while you save up some money? If so, refrain from spending money you don’t have and avoid getting yourself into debt.
There’s a reason salespeople rush you into a decision. Making quick decisions often benefit the merchant rather than the customer. Even if you really want that item, do yourself a favor and sleep on it. If you wake up and still think it’s a good idea to make the purchase, it may be the right decision.
8. Start A Side Hustle As A Freelancer
Perhaps your financial issues are simply down to the fact that you’re not making enough money. Whether this is because of being put on leave or you’ve lost your job altogether, it can be extremely stressful when there’s more money going out than there is going in.
Starting a side hustle can eliminate these problems entirely! Perhaps you’ve got a keen eye for proofreading, or you’re skilled at graphic design or content writing? Try picking up some freelance work on Fiverr to help bring in more money to begin rebuilding your finances.
The great thing about freelancing is that you have control over how much you earn. The more work you take on, the more money you earn! There are so many ways to make more money on the side in this day and age, and what you choose to do is up to you!
As you can see, there are a plethora of ways to begin rebuilding your finances this year, some with the chance of making more money and profiting from it!