Life Insurance Over 50

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For individuals who are young and in good health, shopping for life insurance is often easy and stress-free. Most of the time, young people only need to decide how much coverage they want and apply for a free quote online. Some companies that market term life insurance coverage even let qualified applicants start their policies without a medical exam.

Once you have reached the age of 50, however, your options for life insurance may not be quite so robust. You may have to buy a lower amount of coverage in order to secure a monthly premium you can afford, and it’s more likely you’ll need to undergo a medical exam and face increased scrutiny over your life insurance application.

Fortunately, you can get life insurance in your 50’s and even in your 60’s. You’ll just need to adjust your expectations, and you should be willing to shop around to ensure you’re getting the most coverage for a price you can afford.

Unique Challenges for Individuals Over 50 Buying Life Insurance

As you start shopping for a life insurance policy, you’ll probably notice a few factors that are working against you. These factors aren’t your fault, but they still affect your ability to qualify for life insurance coverage or affordable monthly premiums.

  • Your Age: Where life insurance can be downright cheap when you’re young and healthy, policies only get more expensive as you age. Once you’ve surpassed the age of 50, the price you’ll pay for a meaningful amount of coverage can easily balloon. This is why it’s more important than ever to spend time shopping around and comparing life insurance quotes.
  • Your Health: The older you are, the more likely you will have acquired a chronic health condition that can make getting life insurance coverage a challenge. You’ll need to answer health questions when you apply for a life insurance policy, and the answers you provide could set off alarm bells with the life insurance provider or bar you from purchasing a policy at all.
  • Policy Length: Another issue when you’re older is the term of coverage you can qualify for and purchase. A 30-year term policy will likely be fairly expensive if you’re already 55, for example, whereas a 10-year term policy that only provides a decade of coverage will likely be more affordable. Many older individuals opt to buy permanent coverage that lasts a lifetime, yet permanent coverage like whole life or universal life can also be incredibly expensive.

How and Where to Find a Life Insurance Policy if You’re Over the Age of 50

Regardless of the challenges you’ll face while buying life insurance over the age of 50, you can still purchase this important coverage. With that being said, you’ll never know which insurance company is best unless you compare the best life insurance companies, such as Banner Life Rates.

When working with only one insurer, you are locked into just that insurance company’s underwriting requirements — as well as that insurer’s prices. And, while it may sound strange, not all life insurance coverage is underwritten or priced identically.

For example, an applicant who applies to one insurance company may be accepted as a “standard” policyholder and charged an average premium rate, while he or she may be accepted only as a “substandard” policyholder at another carrier and charged a higher rate of premium — even though they submitted the same answers to the questions on the application for coverage.

This is why it is essential to work with an expert in the insurance field that can submit your information to numerous insurance carriers. Just like when shopping for any other important item, it’s always best to compare prior to making your final determination.

This is where we come in. When shopping for insurance, we can help you compare dozens of plans and companies in a matter of minutes. This way, you can compare pricing and coverage amounts without having to apply with each individual insurer.

Regardless of your age or health, it’s important that you get the insurance coverage that your family will need. You can start comparing quotes from the best life insurance companies by clicking your state below.

No matter where exactly you are in your 50’s, we can definitely get a policy that meets your needs. We know that planning for your death is not a fun task, but it’s one of the most important things that you can do. You don’t want to leave your family struggling to cover your final expenses at a time when they should be grieving and celebrating your life.

Do People Over the Age of 50 Still Need Life Insurance?

You may be wondering if people still need life insurance coverage once they’re in their 50’s. After all, life insurance coverage is geared to people who need income replacement during their working years, as well as those with children and other dependents at home. By the age of 50, you should be winding down your working years, and it’s possible your kids have moved out to begin their adult lives. Why would you need life insurance at this point?

The thing is, consumers can easily need life insurance at any age, and this includes those who are over 50. Although your children may be grown and are no longer depending on your income for their living expenses and needs, there are numerous other reasons for having — or for keeping — this essential financial protection.

Some of the most important reasons can include:

  • Burial Insurance: Regardless of your age, you’ll eventually need burial insurance to cover your final expenses. Today, the average cost of a funeral can easily exceed $10,000 when factoring in items such as the funeral service, burial plot, headstone, transportation, flowers, and a casket or urn. If there are final medical and hospice costs incurred, this could add significantly to the total.
  • Estate Taxes: Estate taxes are another potential area of concern for those who are over age 50. For those who are faced with having to pay estate tax upon death, this liability can erode up to 50% or more of a decedent’s assets. If there is no plan in place, such as life insurance proceeds, for paying these taxes, survivors could end up selling off other assets such as retirement investments or even precious family heirlooms in order to come up with the money. And unfortunately, when such assets are sold in this manner, they are often done so at far below market value.
  • Pension or Retirement Income Replacement: When a retiree dies, their pension may not continue on for their spouse. Buying a life insurance policy can ensure your spouse has some income to keep up with living expenses and enjoy life once you’re gone.
  • Business Succession: Life insurance can help business owners who are over age 50 to use as a business succession tool. Proceeds from a life insurance policy could be used to keep a company running while a replacement owner or partner is located, or while a suitable buyer for the business is found.

These are just a few of the reasons individuals over the age of 50 may want to purchase life insurance, but there are plenty of others. Just keep in mind that, no matter what age you are, it’s only natural to want to leave something behind. A life insurance policy can help you do exactly that, which is why consumers in nearly every age group purchase this important protection each year.

Which Type of Life Insurance is Best if You’re Over the Age of 50?

When shopping for a life insurance policy at any age, it’s easy to become overwhelmed by all the options you’ll find online. Before you commit to shopping for life insurance policies, you should know and understand how each type of coverage works.

Term Life Insurance

Term life insurance is sold for a certain length of time or a “term,” which means that the policy will cover you for only a certain period before it expires. Most term policies are sold for 10 years, 15 years, 20 years, or 30 years. With a term life insurance policy, you are purchasing basic “no frills” coverage. This means that you are obtaining pure death benefit coverage without any cash value or savings component.

Even though the coverage on a cheap term life insurance policy runs out after a given period, these policies can be beneficial in certain situations. For example, term policies are often considered for “temporary” needs such as providing protection during the length of a 15- or a 30-year mortgage balance. In other words, if an individual wanted to make sure that the balance of their home mortgage was paid off for his or her survivors in the event of death, they could purchase a term life policy for the same length of time in which they will have a remaining mortgage balance.

If a term life insurance policyholder wishes to continue their coverage upon the policy’s expiration, they will need to reapply at their current age and health condition. This will typically mean that the premium amount for the new coverage will be higher, and that’s true even if the face amount of the policy remains the same. For many people, this is no problem because the premiums on term policies are much lower than the alternative options.

Related: How Much Does a Million Dollar Term Life Insurance Policy Cost?

Permanent Life Insurance

If you don’t like the idea of your life insurance expiring, then go with a whole life insurance plan. Permanent life insurance plans never expire, but they are more expensive.

The money that accrues in a permanent life insurance policy’s cash value component can typically be borrowed or withdrawn by the policyholder for any need that he or she sees fit. This can provide the policyholder with additional funds for the down payment on a home, the purchase of a car, debt repayment, or even for supplemental retirement income in the future.

Although the premiums for permanent life insurance can be more expensive than premiums for a term policy, the amount of the premium on a permanent policy will typically be locked in for life. This means that the policyholder will not need to worry about his or her premiums increasing in the future — even if they get sick or wind up with a chronic health condition.

In addition to all of the other uses of life insurance for those who are over age 50, a permanent life insurance policy can also be used for the simple purpose of supplementing one’s savings.

For example, a whole life insurance policy can help you to build up cash on a tax-deferred basis that can be drawn upon in the future in a number of different ways. Unlike money that is invested in the unpredictable stock market, funds that are inside of the cash value of a whole life insurance are provided with a guaranteed rate of growth. In addition, because of their tax-deferred nature, funds are allowed to compound over time with no tax due on the gain until the time they are withdrawn in the future.

This can provide not just safety, but also peace of mind in knowing that the principal is protected regardless of what is happening in the market, as well as in the economy overall. In addition, the death benefit on these life insurance plans is also tax-free to the named beneficiary (or beneficiaries). This means the money can be used by survivors for their financial needs, and all without having to hand over a portion of it to Uncle Sam.

While whole life is the most popular type of permanent life insurance coverage, you can also look into universal life insurance, variable life insurance, or even variable universal life. These niche policies tend to work better for consumers who have a specific financial goal, but they could work well for your needs depending on your situation.

Life Insurance with No Medical Exam

Many who have severe health issues may have to look into the option of no medical exam life insurance. This is often the only option for those who have been declined for life insurance in the past.

Each time an individual applies for life insurance coverage, the underlying insurer is essentially taking a risk on whether or not it will be required to pay out a claim. If the insurance carrier feels that the risk is too great, it will either charge the insured a higher rate of premium or it will deny the applicant for coverage altogether.

The good news is that people over 50 in the market for life insurance still have plenty of options — you just need to know where to look. You may assume that you won’t be able to get affordable coverage, but that’s why we suggest that you look into a no medical exam plan from Haven Life to get your life insurance protection.

A healthy man who is 50-years-old can pay as little as less than $15 a month for $100,000 in term life insurance coverage, whereas a healthy 59-year-old can pay as little as $27 a month for the same policy. Even at the age of 59, a $400,000 policy can cost less than $100 a month. Note that these are non-smoker rates for a 10-year term policy.

If you have health conditions like cancer, heart disease, or diabetes while looking for life insurance, you can expect increased rates. Smoking will also increase the rates for life insurance for individuals who are ages 50 to 59.

The Bottom Line

At the end of the day, you’ll never know how much you might need to pay for life insurance unless you shop around. And really, that’s the main piece of advice I hope to impart on individuals ages 50 and older.

Purchasing life insurance coverage can be more challenging when you’re over the age

The post Life Insurance Over 50 appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Guide to Managing Finances for Deploying Service Members

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Life in the military offers some distinct experiences compared to civilian life, and that includes your budget and finances. The pre-deployment process can feel overwhelming, especially when you’re organizing your money and bills. 

It’s important you provide your family with everything they need to keep you and any dependents comfortable and stable. This means gathering paperwork, making phone calls to service providers, creating new budgets, and organizing your estate. The more you prepare ahead of time, the less you have to worry about the state of your investments and finances when you return home. 

To help make the process easier, we’ve gathered everything you need to know for deployment finances. Read on or jump to a specific category below:

Pre-Deployment Needs

  • Review Your Estate
  • Reassign Financial Responsibilities
  • Update Your Services
  • Build a Budget
  • Prepare a Deployment Binder

Deployment Needs

  • Protect Yourself From Fraud
  • Adjust Your Savings
  • Financial Assistance

Post-Deployment Needs

  • Update Your Budget
  • Pay Off Debt
  • Review Legal Documents

Before Your Deployment

There’s a lot of paperwork and emotions involved in preparing for deployment. Make sure you take plenty of time for yourself and your loved ones, then schedule time to organize your finances for some peace of mind. 
investments, and dependents. It’s an important conversation to have with your partner and establishes:

  • Power of attorney
  • Living will
  • Last will and testament
  • Long-term care
  • Life insurance
  • Survivor benefits
  • Funeral arrangements

Anyone with property, wealth, or dependents should have some estate planning basics secured. These documents will protect your wishes and your family in the event you suffer serious injury. There are several military resources to help you prepare your estate:

  • Defense Finance And Accounting Services’ Survivor Benefit Plan and Reserve Component Survivor Benefit Plan
  • Department Of Defense’s Military Funeral Honors Pre-arrangement 
  • Service Member’s Group Life Insurance
  • Veterans Affairs Survivor’s Benefits
  • The Importance Of Estate Planning In The Military
  • Survivor Benefits Calculator

Servicemembers Civil Relief Act (SCRA) allows you to cancel a housing or auto lease, cancel your phone service, and avoid foreclosure on a home you own without penalties. Additionally, you can reduce your debt interest rates while you’re deployed, giving you a leg up on debt repayment or savings goals. Learn more about the SCRA benefits below:

  • Terminating Your Lease For Deployment
  • SCRA Interest Rate Limits
  • SCRA Benefits And Legal Guidance

 

Build a Deployment Budget

Your pay may change during and after deployment, which means it’s time to update your budget. Use a deployment calculator to estimate how your pay will change to get a foundation for your budget. 

Typically, we recommend you put 50 percent of your pay towards needs, like rent and groceries. If you don’t have anyone relying on your income, then you should consider splitting this chunk of change between your savings accounts and debt. 

Make sure you continue to deposit at least 20 percent of your pay into savings, too. Send some of this towards an emergency fund, while the rest can go towards your larger savings goals, like buying a house and retirement. 

Use these resources to help calculate your goals and budgets, as well as planning for your taxes:

  • My Army Benefits Deployment Calculator
  • My Army Benefits Retirement Calculator
  • Mint Budget Calculator
  • IRS Deployed Veteran Tax Extension
  • IRS Military Tax Resources
  • Combat Zone Tax Exclusions

 

Prepare a Deployment Binder

Mockup of someone completing the deployment checklist.

Illustrated button to download our printable depployment binder checklist.

It’s best to organize and arrange all of your documents, information, and needs into a deployment binder for your family. This will hold copies of your estate planning documents, budget information, and additional contacts and documents. 

Make copies of your personal documents, like birth certificates, contracts, bank information, and more. You also want to list important contacts like family doctors, your pet’s veterinarian, household contacts, and your power of attorney. 

Once you have your book ready, give it to your most trusted friend or family member. Again, this point of contact will have a lot of information about you that needs to stay secure. Finish it off with any instructions or to-dos for while you’re gone, and your finances should be secure for your leave. 

While You’re Deployed

Though most of your needs are taken care of before you deploy, there are a few things to settle while you’re away from home. 
Romance and identity scams are especially popular and can cost you thousands. 

  • Social Media Scams To Watch For
  • Romance Scam Red Flags
  • Military Scam Warning Signs

 

Adjust Your Savings 

Since you won’t be responsible for as many bills, and you may have reduced debt interest rates, deployment is the perfect time to build your savings.

While you’re deployed, you may be eligible for the Department of Defense’s Savings Deposit Program (SDP), which offers up to 10 percent interest. This is available to service members deployed to designated combat zones and those receiving hostile fire pay.

Military and federal government employees are also eligible for the Thrift Savings Plan. This is a supplementary retirement savings to your Civil Service Retirement System plan.

  • Savings Deposit Program
  • Thrift Savings Plan Calculator
  • Civil Service Retirement System
  • Military Saves Resources

 

Additional Resources for Financial Assistance

Deployment can be a financially and emotionally difficult time for families of service members. Make sure you and your family have easy access to financial aid in case they find themselves in need. 

Each individual branch of the military offers its own family and financial resources. You can find additional care through local support systems and national organizations, like Military OneSource and the American Legion. 

  • Family Readiness System
  • Navy-marine Corps Relief Society
  • Air Force Aid Society
  • Army Emergency Relief
  • Coast Guard Mutual Assistance
  • Military Onesource’s Financial Live Chat
  • Find Your Military And Family Support Center
  • Emergency Loans Through Military Heroes Fund Foundation Programs
  • The American Legion Family Support Network

After You Return Home

Coming home after deployment may be a rush of emotions. Relief, exhaustion, excitement, and lots of celebration are sure to come with it. There’s a lot to consider with reintegration after deployment, and that includes taking another look at your finances. 

 

Update Your Budget

Just like before deployment, you should update your budget to account for your new spending needs and pay. It’s time to reinstate your car insurance, find housing, and plan your monthly grocery budget. 

After a boost in savings while deployed, you may want to treat yourself to something nice — which is totally okay! The key is to decide what you want for yourself or your family, figure if it’s reasonable while maintaining other savings goals, like your rainy day fund, and limit other frivolous purchases. Now is not the time to go on a spending spree — it’s best to invest this money into education savings, retirement, and other long-term plans.

In addition to your savings goals, make sure you’re prepared to take care of yours and your family’s health. Prioritize your mental health after deployment and speak with a counselor, join support groups, and prepare for reintegration. Your family and children may also have a hard time adjusting, so consider their needs and seek out resources as well. 
FTC | NFCC 

The post Guide to Managing Finances for Deploying Service Members appeared first on MintLife Blog.

Source: mint.intuit.com

The Shame of Debt

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Money doesn’t make you happy. That’s how the saying goes, and you can’t deny that there’s some truth to it. However, while having lots of money won’t make you happy, having very little is more likely to make you stressed and depressed. 

The less you have, the more likely you are to stress over the smallest of things, and if debt is forcing that poverty on you, hanging a dark cloud of uncertainty over your head, that stress and that depression will increase.

Psychological Cost of Debt

Debt has a massive psychological cost and a lot of that boils down to shame. Debt stress and debt shame are more common than ever in the United States, as debtors seek to hide their troubles from their families and loved ones. There is an unmistakable link between debt and an increased suicide risk.

A student conducted several years ago looked at the finances of people who had committed suicide and found they were significantly more likely to have massive debts (student loan debt, credit card debt). Similar studies have been conducted on mental health, noting that people are more likely to suffer from debilitating depression, stress, and anxiety when they have problems with debt.

And it’s easy to see why. Not only do many debtors choose to keep their problems to themselves, feeling an immense shame that stops them from telling even their closest friends and family, but debt can also lead to anxieties about debt collectors, foreclosures, repossessions, bankruptcy, and more. 

How to Overcome the Shame of Debt

To improve your mental health, you need to fight debt stress and shame. That’s easier said than done, but there are a few things that you can do:

Understand Where the Shame Comes From

The first step is to understand why you feel the way that you feel. This might not fix your debt shame, but it will help you to understand it more.

There is no single, overriding cause of debt shame. Some debtors feel shame because they see themselves as the breadwinner, the provider, and if they have debt it means they have failed. Others feel shame because they come from frugal backgrounds and have been wasteful or because their debt is the result of a drug, alcohol or gambling problem.

Whatever the reason, you need to find it, address it, and fix it. Get help for that gambling or drug addiction, get advice from that frugal family.

Admit Your Fault

Debt doesn’t mean that you’re a bad or useless person. It doesn’t mean that you don’t care about your family. It’s not a character flaw tied to your personality, it’s a behavioral issue tied to impulsivity and even mental health issues. It’s still your fault, but it’s easily fixed and doesn’t make you a bad person.

Understanding this can help you to get rid of that shame and deal with your stress and mental health issues.

Improve Your Financial Knowledge

Researchers have found a direct correlation between debt and financial knowledge; the more you have of the former, the less likely you are to be competent in the latter.

Fortunately, it has never been easier to educate yourself. Take a look at the many guides here on Pocket your Dollars, spanning everything from pay off strategies for credit card debt to money-making ideas, recommendations for loans and credit cards, and more.

Get Credit Counseling

Credit counseling exists for a reason and can help you in your time of need. They’re not mental health counselors, they can’t prescribe you medication and they can’t help with your insomnia and anxiety. However, they have worked with countless debtors, many of which have anxiety and depression, and they understand what it’s like to be in your shoes.

They can help you to assess and manage your debts before advising on the right course of action. A financial therapist can also provide assistance with any relationship issues, counseling you on who you should tell, how you should tell them, and what sort of reaction to expect.

The problem that many debtors have is that they think they know everything. They won’t speak to a counsellor because they’re convinced they know what the counsellor will say. But let’s be honest, if you’re struggling with debt, there’s a good chance you’re not a financial wizard and even if you are, it always helps to speak with an expert, voicing your concerns out loud and bouncing some ideas around.

Stop Spending

We spend when we’re depressed, get depressed because we’re in debt and are in debt because we spend too much. It’s a cycle that’s keeping your favorite retailer in profit and doing untold damage to your finances. To get out of debt, you need to accept that this cycle exists and that the only way to escape is to stop that spending immediately.

Anything that isn’t an absolute necessity can be left for another day, preferably one when you actually have money to spend. Limit your spending to clothes, food, rent, utility bills, medical bills, and everything else that allows you to continue living comfortably from day to day, but give the alcohol, cigarettes, vacations, and other luxuries a miss.

How to Take Control of Your Debt

The best way to avoid the shame and stress of debt is to get rid of it. Studies on debtors have found that at least 9 out of 10 believe they will be much happier if they didn’t have debt. These beliefs have been confirmed by individuals who successfully pay off debt, claiming = they are much happier than they ever were.

There are many ways you can pay off debt and we’ll look at a few of these options below, but generally speaking, you need to:

  • Assess your financial situation
  • Check your credit report and credit score
  • Get help from a credit counselor or financial therapist
  • If your debt-to-income ratio is low, budget better and pay off more with a debt payoff strategy
  • If your debt-to-income ratio is high, try debt relief
  • Create an emergency fund to prevent future issues

Best Ways to Get out of Debt

There is no debt shame if there is no debt. As discussed above, debt is not something you should be ashamed of, but it’s also not something you should cling onto. It can cause you a great deal of stress, placing strain on your relationships and generally making life very difficult for you.

So, while it’s important to face the truth of the situation and dispel those feelings of shame, it’s just as important to fight your debt and get your head above water. Here are a few debt relief options and debt payoff strategies that can help. For more information, including expensive guides and recommendations on each of these options, take a look at the relevant sections on Pocket Your Dollars.

Snowball and Avalanche Methods

The debt snowball and debt avalanche methods are two of the most popular debt payoff strategies, and ones that we have discussed at great length before (see debt snowball vs debt avalanche). They can make the process more systematic, which, in turn, may provide you with the support and the structure you need to get your debts in order. 

In both cases, you need to make a list of all your debts, covering things such as Balance, Monthly Payment, and Interest Rate. For debt snowball, sort the list by balance and go from the smallest to the largest. For debt avalanche, focus on the debts that have the highest interest rate and get those out of the way first. With both methods, you need to keep meeting your monthly payment obligations, before putting any extra money you have towards your chosen debt.

Debt avalanche provides the most practical benefits as it clears the problematic debts first, thus reducing the total interest. Debt snowball provides more of a psychological boost, giving you motivation as you steadily clear your debts.

Major Sacrifices

The biggest issue with any debt payoff strategy is that it isn’t easy to get the extra money you need to make those additional payments and clear your debts early. However, many debtors are trapped in a cycle of debt not because they can’t scrape the cents together no matter how hard they try, but because they struggle to budget properly and make the necessary sacrifices.

The average American debtor spends thousands of dollars every year on uneaten groceries, lottery tickets, and media subscriptions. They drop hundreds of dollars on luxuries they don’t really need and spend over $3,500 a year eating out. If debt is dragging you down then it’s imperative that you clear it, which means making some sacrifices and getting your priorities in check.

If you genuinely can’t spare a dime and don’t waste money on unnecessary expenses, then look into some of the options below.

Debt Settlement

Debt settlement is tailor-made for unsecured debt and works especially well for clearing credit card debt, as well as private students. Debt settlement companies often request that you stop meeting your monthly payment obligations, which puts the accounts into doubt and means your creditors are more likely to accept a settlement.

This settlement will clear the entirety of the debt for a fraction of the price, often around 50%. This means that a credit card debt of $10,000 would be cleared for $5,000, providing you with some big savings even after the settlement fees have been taken into account.

Debt Consolidation

A consolidation loan is a large loan that pays off all of your debt at a reduced interest rate and for a reduced monthly payment. The loan is often extended by several years, which means you pay more in the long-term, but the reduced monthly payments alleviate some of the burden and make the debt more manageable.

Debt Management

Debt management provides debtors with a debt repayment strategy, with all funds funneled through the debt management plan and then distributed to creditors. This service is often provided by credit counseling agencies and credit unions, who begin the process by negotiating with creditors and then assuming control of all debts.

These companies often ask that the debtors cancel all but one credit card, which can reduce the debtor’s credit score by impacting their credit utilization ratio.

Balance Transfer

A balance transfer credit card lets you move all your credit card balances onto a single card, one that offers a 0% APR for the first 6, 12 or 18 months, allowing you to pay down debt without interest, thus reducing compounded interest and clearing the debt quickly.

This method works with all credit card debt and you can typically move between 1 and 5 balances onto a new credit card, providing that card isn’t offered by the same company.

The Shame of Debt is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

5 Financial Goals to Start in 2021

by Posted in Financial Planning, Find An Apartment Tagged , , , , , , , , ,

 

Although many people start New Year’s resolutions in January, there’s nothing magical about January with regards to self-improvement. Still, the best time to make a change or set a goal is today, so if you’re ready to level up in your life, there’s no time like the present. Here are five financial habits that you might consider starting this year. 

Commit to a written budget (and review it often)

The very first thing that you’ll want to do is commit to a budget. Having a budget is the cornerstone and foundation for financial success. Knowing where your money is going (and not going) can help you understand where you’re at. If you’ve had trouble making or keeping a budget, resolve to start a budget this year. A tool like Mint can be a great way to put your budget on autopilot.

Remember that a budget is just a tool to help you to not spend money on the things you don’t find important so that you have money to spend on the things that you do find important. If you already have a budget, make it a habit to review your budget, at least monthly. That can help you identify where you might be able to make improvements.

As you start or recommit to your budget, make sure that it is written down. Budgets that are not written down, like goals, tend to fall by the wayside easily.

Start (or build) your emergency fund

Another great habit to get into in 2021 is starting an emergency fund. An emergency fund should be one of the very first things you do with any extra money you have in your budget. Even before working on eliminating your debt or saving for retirement, it makes a lot of sense to set aside money for emergencies.

A good rule of thumb is to start with a $1,000 emergency fund. It may not cover catastrophic emergencies, but it can help you to avoid having to spend on your credit cards when the unexpected happens. After you’ve started that basic emergency fund, then you can continue to build it up while also starting to pay off debt or invest for the future. If you can, it’s a good idea to have a couple of months of expenses in your emergency fund. That way you’re covered for a while in case you lose an income source or have a major emergency.

Make a plan to eliminate your debt

The next habit to start or continue this year is to eliminate your debt. Depending on how much debt you currently have, it may not be realistic to pay off all of your debt in 2021. But no matter what, you should have a plan in place. There are a variety of different debt repayment strategies – the debt snowball and the debt avalanche among many. It’s important to pick a debt payoff approach that works for you, and that you can stick to. Make it a habit to spend less than you earn and work towards becoming debt-free.

Spend with a purpose

Another great habit that can help you live within your means is to spend with a purpose. Spending with a purpose means that you are conscious with your spending. If you ever find yourself wondering where all your money has gone, you may benefit from being more deliberate with your spending.

Many people find success by setting a rule about any non-essential spending. For example, before you make any purchases besides essentials like rent, utilities, and debt payments, you must write it down. Just the act of writing it down (or taking a picture of it) is enough for many people to be more deliberate and conscious about what they choose to spend their money on.

Pay yourself first, and make sure to give yourself a raise

If you’re like many people, you may have good intentions of saving money each month, but at the end of the month, you find there’s nothing left over after all the bills are paid. One habit that people who are successful financially have is to pay themselves first. Put your savings money aside at the BEGINNING of the month. It’s a bit of a mental trick, but many people find that having that money out of sight helps them to save more.

Another financial habit to start is to always give yourself a raise. Whenever you get a raise at work or come across any “extra” money, IMMEDIATELY put it either in your emergency fund or use it to pay down your debt. Putting any raise or extra money towards your savings (instead of increasing your standard of living) is a great habit to start. 

This is a great habit to start, especially if you are young or just starting out in your professional life.  Of course, paying yourself first and giving yourself a raise, doesn’t mean that you have to only eat ramen or can’t have nice things. But thanks to the magic of compound interest, the sooner you start to save and invest, the better off you’ll be.

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Source: mint.intuit.com