This year has been a time of rapid change. We entered 2021 with a worldwide pandemic and now seven months later, many people are vaccinated, returning to work and a somewhat normal life.
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This change in lifestyle calls for a reevaluation of finances. Perhaps now that going out and traveling is an option, your savings are dwindling. Or maybe you’re in scarcity mode trying to save every nickel in fear of another lockdown.
GOBankingRates talked to financial experts to determine what you should cut from your budget and where you can feel best spending your hard-earned money.
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Look For Lower Insurance Costs
If you’re looking for areas to instantly reduce your budget, consider looking into lower car, home and renters insurance. Andrea Woroch, a writer and money-saving expert, said looking for cheaper insurance takes seconds and can help you save a lot of money if you look to the right sources.
“Begin by shopping around to see if there are any better deals with competitor companies, (then) take it a step further and increase your deductible to reduce your premium even further.” Woroch said. Woroch recommended TheZebra.com to get personalized car and home insurance quotes in minutes.
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Focus On Paying Off Debt
During the pandemic, many people deferred payments on student loans or paid the minimum payment on credit cards. Now that the economy is getting back on its feet and the workforce is returning to the office, Jennifer Harder, the founder and CEO of Jennifer Harder Mortgage Brokers, said it’s time to reexamine debt payments and try to pay off as much as possible.
“Credit card debt must be a key priority when it comes to debt repayment,” Harder said. “It grows and extends, unlike your car or mortgage payment, and is difficult to cut.” Harder also recommended increasing your monthly payment on your car or house if you still need to pay them off and have the means.
Limit Impulse Buys
In a year that lacked a sense of control, many of us turned to online shopping to help us get through. While it helped cure boredom and provided a little retail therapy, experts are saying it’s time to tighten back up now that things are returning to normal.
Woroch said to take a really close look at what you’re buying and why. “Though there’s nothing wrong with indulging in a dinner away from home and going on a trip here and there, it’s really important to understand the reason behind your splurge. Purchasing new clothing just because you can go out and do it in person is wasteful and can result in serious damage to your budget and lead to debt,” Woroch said.
If the temptation to spend money is too great, Woroch recommended cutting down by unsubscribing from retail newsletters and searching for apps that can help you save money when you shop online, like Cently or Rakuten.
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Take a Trip
Though it might seem like experts are ruling out any indulgences, most agree traveling doesn’t have to be one of them.
“As long as you set a travel budget, going away with your family and friends is good for the soul!” Woroch explained. “I think it’s important for you to continue spending money on (traveling), especially if it means reuniting with loved ones you haven’t seen throughout the pandemic.”
Of course, there are always budget tricks to make trips as affordable as possible. Woroch recommended using a credit card you can earn miles on for a free trip in the future, and seeking out sites like ScottsCheapFlights.com for good deals on airfare.
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Pick Your Essential Subscriptions and Ditch the Rest
Since we were glued to our couches in 2020, we opted for every entertainment subscription possible. But now that we have destinations beyond the living room, we can decide which ones are worth keeping.
“There’s a high chance you’re paying for at least one subscription service from which you’re not receiving any value,” said Ebony Chappell, co-founder and CMO of Formspal. “Examine your credit card bills for regular monthly charges and create a list of the services you’re paying for. Consider if each one is really worthwhile, or whether the money might be better spent on anything else.”
“I would urge my clients to continue to set aside money,” said Danielle Holden, a family office advisor. Holden cautioned that you don’t need to save like a crisis can happen at any moment, but you don’t want to totally neglect stashing money away now that the world is opening up.
“A lot of people also had to dip into their savings during COVID, so I would recommend trying to build that back up as much as possible to avoid taking on any new debt to fund emergency spending,” Holden said. At the end of the day, save what allows you to feel comfortable in your day-to-day life without constantly worrying about the future.
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Last updated: July 14, 2021