If statistics are anything to go by, 2020 unearthed some serious loopholes in most American’s personal finance management. If anything, it proved that we need to change how we handle our money.

The pandemic affected everyone from all sorts of backgrounds, and woe unto you if it caught you financially unawares. And it’s all because of one important but overlooked fact.

Saving!

Americans are spenders. That’s what drives this economy. Spending is not bad. Spending badly, however, is the problem. Not planning your personal finances wisely is worrisome.

I learned my lesson 10 years ago. My pandemic came 10 years ago when I almost lost all will to live because of my poor personal finance management. I went through a rough divorce, had a $40,000 debt, and we almost got evicted out of the house. And that’s when I began working on my personal finance until I achieved financial freedom.

Don’t let the next pandemic be your eye-opener. You have to act now to save your future. So here are some incredible tips to manage your personal finance in 2021.

Don’t save for a specific goal

Sounds scandalous, right? Don't just save for the next vacation, next diamond ring, a home, or a gift contrary to what most financial advisors will tell you. This only leaves you naked when you achieve that goal. Furthermore, saving for a specific goal only makes sense in a predictable world.

In the real world, shit happens. Case in point, Covid-19. Savings should be a hedge against life's inevitable ability to surprise the hell out of you at the worst possible moment. You should save for all worst-case scenarios, not just a specific thing. This protects you from the element of surprise and gives you enough room to think over your next move.

For instance, when the covid19 pandemic hit, Americans who had saved money for the sake of saving and had money in their bank accounts were able to handle the situation much better. Savings without a spending goal gives you options and flexibility. It gives you time to think, time to relax, and the ability to wait for the next opportunity. Financial independence is very important and that can only happen if you save for the sake of savings.

Invest in yourself first

The best investment you can ever make is on yourself. Investing in yourself has no risks and the returns are invaluable. It doesn’t even have to cost money, and the best thing is it will help you bring in more money and be able to manage what you already have better. Because experiences are more valuable than things. Materials depreciate with time, but when you invest in yourself and your experiences,  you’ll be happier with less stress and anxiety.

Some more ways to invest in yourself include:

• Reading finance blogs like this one to improve your personal finance management.
• Joining an online class to increase your job marketability.
• Eating healthy and exercising.
• Reading books, joining a gym, basically anything that improves your life.

I want to wake up everyday knowing my family and I are okay, we can do whatever we want, on our own terms, without burning out. Every financial decision we make revolves around our self-improvement. You should too.

Set a budget

Creating a budget and sticking to it is the backbone of any personal finance management. If you don’t set a budget, you risk spending on unnecessary things in your life and growing your debt. As I hinted, I once had a $40,000 debt and the only way I got out of this debt in a record 2 years was through budgeting and conscious investment. Because you work so hard to earn the money, why not spend some time to figure out how to manage it well. Write a budget. Here’s how:

• Write all your incomes on one side.
• Write all your expenses on the other side including overdue ones.
• Incorporate your values into your budget. This will help you prioritize the most important things to pay for first.
• Break down your budget into chunks. You can set every receivable income with its own mini-budget.
• Give every dollar a job.

Automate your savings

One thing that turned my life around when I was in my darkest pit was savings, and not just saving but saving with a proven strategy.

Most people are afraid of saving because they fear it will leave them without enough money but that’s the wrong mindset. If you find someone who knows their craft, been there and done that, then your confidence in saving will double. And I can be that person.

Because no personal finance management strategy is complete without a saving strategy. The absolute best way to save is to focus on the long-term and saving a regular amount consistently. And with an expert finance coach who knows her work, you will achieve your financial goals much faster.

Cut off unnecessary expenses

The reason we find ourselves in debt most of the time is because of this one thing. Spending on unnecessary things. In fact, most people spend before they even earn giving them the illusion that they have enough money only for the end month to come and realize they’re at a deficit.

Focusing on small smart financial choices can help reduce financial stress. For example, you don’t have to upgrade the items you already have because you will likely take unnecessary debt. Don’t compare yourself financially to others. Their journey is different from yours. Removing distractions from your life can help increase your focus and live a fuller life. What you do today determines your future.

Set up automatic bill payments

A great way to avoid spending unnecessarily is to automate your spending. This way, the money gets to fulfill its functions without you interfering. You won’t even have space to spend on unnecessary stuff. You can liaise with your bank on automatic bill payments or use software products that do this for you.

Conclusion

Are you committed to taking daily action until you achieve your financial goals this year? All in all, don’t let another pandemic find you unprepared. I have found the best strategy to mitigate this is saving only for the sake of savings. Don’t specify the reason, because the reason will be one: hedging against life’s uncertainties because that’s where we all go wrong. Tomorrow is never promised. It is very important to change your money mindset if you want to be financially independent. Here are the tips once more:

1. Invest in yourself first
2. Set a budget
3. Automate your savings
4. Cutoff unnecessary expenses
5. Set up automatic payments

Financial independence should be a priority in your life and that can only happen if you save for the sake of saving. Financial independence has always and will always be a personal financial goal for me.

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