How to make 2021 your most financially successful year

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It can be hard to look back at the year that was 2020 and even begin to think about the year to come, let alone make New Year’s Resolutions. With so much uncertainty over when normal life might return, any sort of prediction can seem like a fool’s errand. But it can also be the perfect moment to take a step back and evaluate what life we want for ourselves. For some of us, that might mean finally getting a grip on our finances, and putting the days of fearing to look at our bank accounts behind us. If you want to be one of those people, here are some suggestions for New Year’s Resolutions for your financial life.

Track all your expenses for a single month 

This is maybe the most impactful resolution you can commit to, but maybe also the hardest. Write down every single euro and cent you spend for one month, so you know exactly where your money goes. This is the first step in figuring out where you can save money. 

There are ways to make this task easier. If you use multiple bank accounts or credit cards, consolidate it all in one. If you’re a Vivid user, and you manage to switch over most or all of your spending to your Vivid account, you can use our spending analysis tool in the app to do most of the heavy lifting for you. 

But don’t be passive about it. Keep a money diary, where each week you write down what you spent and where you spent it. You might be surprised where your money went by the end of the month. 

And if you enjoyed yourself, keep it going for the next month. 

Set up different Pockets for your everyday expenses 

This is a decades-old trick from personal finance experts. In the past, they would recommend people keep jars, where at the beginning of a month they would put in a set amount of cash in for groceries, utilities, recreation, going out, and other spending categories. By limiting the amount ahead of time, people were far less likely to go over their budget, without feeling majorly restricted. 

You don’t need to use jars. After all, it’s the 21st century, and we have digital banking apps that make life easier. Make a Pocket for each category, and if you want, set up a virtual card for each one. Commit to only spending what’s you put in the pocket for the whole month, and see if that helps keep you on track. 

Commit to a savings goal, and then make it smaller 

Yes, you read that right. Figure out an amount you can set aside per month. Multiply it by 12 to get your yearly goal. Then, take two months away from it. 

If you manage to put away your savings amount for 5 months, you can take the amount from the sixth month and put it into a fund for frivolous expenses — things you allow yourself to buy without a shred of guilt. It will not only help keep you on track, but you might find yourself enjoying the frivolous fund much more than if it had been a normal purchase.