NEW YORK, June 11, 2021 (Newswire.com) - You've emerged from your hibernation. You're up in the gym just working on your fitness. And you're back in business with brunch, live events, and other activities that amount to you probably spending all your money in 2021. OK, maybe not all but more than you did in 2020.
Here are some personal finance tips to consider as you get back to having the time of your life with the economy reopening.
Let's get it started with your emergency savings
Let's get into it. But not get stupid.
Your emergency savings is key to helping you avoid financial crises. Generally speaking, experts advise that you put away three- to six-months' worth of living expenses to fall back on in case you lose your job or need to pay for an unexpected car repair/medical bill. But after experiencing the past 15 months, you may want to reevaluate how much you're saving for emergencies.
Think of three months merely as a starting point and consistently add to your emergency fund as you're able to. You never know when the next catastrophic global pandemic will happen.
I gotta feeling you should pay down your debt
While building your emergency savings might be your top priority, that doesn't mean you can't pay down your debt simultaneously.
According to the Consumer Financial Protection Bureau, credit card debt dropped significantly in 2020 as travel and entertainment spending plummeted, even for consumers who were having financial trouble before COVID-19. But overall U.S. consumer debt hit a record high of $14.88 trillion, according to Experian data.
If you're struggling to get over the debt hump and feel like you've been inside since Chaka Khan's weird version of the national anthem at the 2020 NBA All-Star Game, well, you're in luck with the first. Can't really help with that second bit.
Coming up with a debt repayment plan is a good first step. And if you're completely in over your head, you may want to consider a personal loan for debt consolidation to lower your interest rate and streamline your debt into a single monthly payment.
Where is the love for budgets?
Working off of a budget may feel as unfamiliar as seeing people's mouths, but recommitting to your financial plan or implementing one is a helpful way to avoid overspending as you adjust to the "new normal."
A popular budgeting method is the 50/30/20 rule, which has you designate 50% of your income toward needs, 30% toward wants, and 20% toward savings and paying down debt. This method allows you to factor your emergency savings and debt repayment into your budget.
If this all sounds so two-thousand and late, I can't argue with you. But what if I told you I'm so three-thousand and eight? Just take the free advice and fire up The E.N.D. on your iPod Nano.