How to Financially Prepare for 2021

hey guys it's dana and it's time to talk about money and in this video i wanted to talk about preparing financially for the new year so let's talk about that okay so 2020 was a very challenging year uh to say the least uh emotionally financially socially it was it was difficult so maybe you're like me and you're looking forward to the new year to the next year 2021 how can you best prepare financially possibly in 2020 you might have suffered a layoff um job loss maybe you just had to resign because you needed to be home with your kids because kids are all you know doing virtual schooling um whatever the reason 2020 might have been difficult financially for you and in this next year who knows what's going to happen we're kind of waiting to find out whether it's going to be another stimulus check those talk about student loan forgiveness what how much would that be whether would you qualify based off of your your income and all this stuff so there's lots of different factors i do think though personally i don't think that relying on another stimulus check or student loan forgiveness is the way to go um because you know yeah it's the government but who knows what's going to happen in the new year but i wanted to say when you're planning financially for the next year the number one thing that i i want to say off the bat here was if you haven't gotten life insurance if one thing 2020 has taught us it's how important life insurance is for your family so if you only have life insurance through your employer i think that you should strongly consider getting a separate policy outside of work my husband and i both have it through our employer but we also have another policy outside of our of uh outside of work in case um one of us were to get sick and we couldn't work or we had to leave our job to be with the kids um and then you know something happened to us you know you want to have a separate policy and it nothing you know if you love your family if you love the people who rely on you financially then it's something that you can do and a lot of times it's really not that much money so in this new year i think that just consider getting a separate policy outside of work you can have the one through work but make sure you have additional policies and this means also if you're you know a stay-at-home parent if you're not working um you still need a life insurance policy because you definitely have value obviously you have a tremendous value not just financial value but you have a financial value um to your to your family because if you weren't there then your partner would have to hire someone to come in and do all the things that you do in the home okay all right so that's something that i think is important to consider in the new year next i think is obviously debt i have to talk about that next all right a lot of people have lost jobs lost income um in this past year and then maybe you've been relying on credit cards you've been you know borrowing money in order to make it buy to pay your rent mortgage whatever it is maybe your debt has just gone up and in this next year this could be your year to really eliminate debt reduce debt and that is honestly the best way to build wealth is to not have all of these payments right when you're when you have all these the stuff if you have car payments if you have credit card payments all the money you make just goes right back out the door to pay back all these people and it impacts your spirit and it impacts so many things it makes you really feel um as if you have chains around your neck because you literally sort of do you have somebody who owns you essentially when you owe money to people so try your best to reduce debt in this next year maybe you can lower some other things cancel some things cancel netflix cancel a couple like try your best to put whatever you can to pay that off and if you can't then possibly make the commitment to yourself and your partner make it together that you're not going to borrow any more because even if you just do that then that will help you financially if you just say we're not going to borrow any more money in this next year maybe you can't reduce the debt but you can you can at least make that commitment that you're going to do whatever you have to do to not borrow money work extra um you know wherever you can sell stuff online so that you don't have to borrow okay so try to make that a priority as well in this next year increase your emergency fund okay so again 2020 has taught us emergencies certainly happen things that are unexpected so maybe you want to really boost or bump up your emergency fund put whatever money you can in there in this next year because none of us know what's going to happen in 2021 we have no idea right so it's not a bad i not a bad idea to have extra money sitting there just in case and i think your emergency fund needs to be in some kind of account that you can get to quickly if you think to yourself well we have a lot of investments that we could access but that could take some time to get to so you need to have an emergency fund that's either just in a regular money market account or savings account at your bank that you can get to um readily not just not something that's going to take several weeks to get to or you know even longer so you want it to be something that's accessible i wouldn't recommend cash under your mattress but a little bit of cash is not a bad thing in my opinion to have around the house again just in case you had to you know quickly go out and get gas or something and i don't know bank cards weren't working so just a little bit of cash and then have an emergency fund in a bank that's that's my uh that's what we do that's what we do next is budgeting if you have not been budgeting at all or you budgeted one time and you like once this is actually what i did in the past we one time on a piece of paper or on a spreadsheet i put down what we made what our bills were once and said okay that's it it's done and that is not the way to do it because as money comes in every month is different how much money that comes in as well as what the bills are that you pay certain bills you pay quarterly maybe annually certain months you have birthdays there might be weddings in 2021 i heard there's going to be a huge flood of weddings because so many people put them off in 2020 so if you have weddings to attend to to attend in 2021 you're gonna need money for gifts for them or to travel or you know for clothes to go to the wedding so every month is very unique so that means that every month you should have a unique budget and you should prepare it before the month begins and whether that's on an app on in an excel spreadsheet on google drives or on a piece of paper on a white board whatever works for you it doesn't matter the method that you do it doesn't really matter the important part is that before the month starts you put at the top of the page how much money you expect to be getting that month in earnings and then underneath it you put all the bills that you have whether your rent your mortgage your water electricity food credit card payments whatever all the payments that you have should go underneath it and then at the bottom you'll see how much money you have left and if there isn't anything left then you need to go back up and either boost how much money you're going to be making or you're going to have to reduce how much money you're spending on food or what some other category you're going to have to cancel something else if you have extra money left over that money can go to your savings account or to paying off debt wherever you you are in your financial journey but if you don't write it down then you just don't know what's going on and then the money is just going to be gone it's just going to leave you're just going to be spending spending spending because you don't know what the heck's happening so um you don't want that to happen and in this new year try to really make a budget every single month and that way you'll know what's going on you'll feel more in control and you'll feel like you actually can spend the money that you have because you already budgeted it out you planned it so you'll feel freer when you're spending it's an interesting thing how that happens but it does all right so if you've been budgeting all along then this next part is really easy if you haven't then it might take a little bit more work you might have to look through some bank statements but look back and see your spending over the past year i love to do this this time of year because then we can plan for the next year we can plan the whole year out and the way we do it is um on an excel spreadsheet on a tab i just kind of do it like this where you put the months at the top um january through december all in the columns and then down the side you're going to put all your categories whatever you spend on throughout the whole year you can be as detailed as you want to be but food you know all your utility bills if you pay we pay for kids activities that would go in here your savings your debt everything medical bills that all goes down the side and then you go across you can total it on the side and you can total it down the bottom and then you'll see at the bottom your total of what you spent that whole year and i think it's really interesting to do that because then you can determine if in certain categories you're really overspending or you know maybe you're over saving somewhere else like it just gives you more like a a picture of the whole year so you can plan everything better for the next year and um i think it's fun i think it's fun to do it maybe you don't but i think it's really fun to be able to see that whole thing and then i print that paper out actually and i stick it in my folder for my taxes so then i can i just have it every year i can see on there what we spent um you can also put in there what you earned if you want to put that at the top but it just kind of helps you know to figure out where you want to reduce spending or increase spending or oh hey we can actually afford a better vacation if we pivot and adjust this category and lower that so it just gives you more power and control over what's going on with your money okay so for us for this next year we are really working on renovating our house um which i've talked to you about before i made a whole video for last week talk actually showing you the renovations that we've done recently and talking about it and telling you how much we spent on everything but i filmed it i edited it i uploaded it but i couldn't bring myself to set it public because i included a bunch of video clips uh talking about how that my neighbor and all the problems we've been having with my neighbor with her interfering with the contractors who are working on our property and i just didn't feel right about putting it up i just felt like it was the tone of it was negative and i just don't i just couldn't put it out there um to be sort of displaying my neighbor's misbehavior publicly like that um even though i don't care for her and i don't speak to her i just did not i just felt like i you know what i don't think i should be posting this which is it was painful because i spent so much time on it but i did not put it up so i'll have to make another video um again to talk about all the renovations we've been doing and try to um um i don't know so because i wanted to share that with you as far as what we're spending on our house and all the things that we're doing um but i have to redo it because i just didn't feel right about sharing all those video clips that i have of my neighbor and um how she's been making us nuts but it's fine it's so um anyway so i will uh do my best to film a video in the future but that's our that's what we're doing 2021 is that's what we have you know been we've budgeted for that and right now we're interviewing contractors to do our kitchen and our bathrooms and um so it's gonna be interesting year for us as far as that goes and uh right all right so if it's your first time here be sure to subscribe um i will talk to you next week hopefully i'm trying to be here every week but our kids are now back to fully virtual and it's very difficult for me to find time um and energy honestly to uh to film and edit and everything with everything going on in our household um with you know the kids being here all the time and my husband and i working and all that alright so that's it i'll talk to you guys in the next video bye guys

Channel: Debt Free Dana ツ

Views: 32,626

Rating: 4.9568529 out of 5

Keywords: debt free dana, frugal, thrifty, frugal living, yearly planning, plan year in advance, plan year, plan year ahead, saving, new year, new year 2021, 2021, money, how to budget, how to prepare financially, recession proof, recession, how to prepare recession, recession 2021, stimulus check, second stimulus check, student loan forgiveness

Id: TsdGjYV9-wk

Length: 12min 14sec (734 seconds)

Published: Tue Dec 01 2020