Six Financial Resolutions for 2021

Writer: Jodi-kay Williams

2020 is finally over… hallelujah!! A new year is here, and you know what that means! Apart from vaccines, it’s time for our New Year’s Resolutions. And of course we’ve got our financial resolutions. 

There might not have been any fireworks by the Waterfront this year, but that doesn’t mean we’re throwing away all our traditions. Nope, this is usually the time of year when everyone makes their grand to-do list for the new year, and we’re definitely keeping that tradition.  I’ve got six things that everyone needs to have on their 2021 Financial Resolutions to help you win this year.

1. Apply for your credit report

If you watched my video from a couple weeks back, then you’ll know that while it isn’t talked about much in Jamaica, your credit score actually plays a crucial role in the loan process at most financial institutions.  Your credit score lets lenders know how likely you are to repay the loan and how much of a risk you pose to the institution. If you are granted the loan, then they’ll use your credit score to determine your interest rate and how long you have to repay.  But as we saw in the comments on that video, a lot of people didn’t even know that Jamaica uses a credit score system.

The good news is that applying for your credit report is super easy. You just contact a credit bureau like CreditInfo Jamaica, CRIF Information Bureau Jamaica Limited and Credit Information Services and they’ll assist you. Every person and business is entitled to receive one free credit report per year from any of the bureaus, so it’s a win-win.  You can do it online. 

And here’s the important thing. Sometimes the information on your credit report is wrong or out of date. They may have loans on there that you’ve paid off already but are still reflecting on  your credit report and bringing down your credit score, which affects your chances of getting another loan. If that happens, you need to contact the credit bureau and make them aware of this. So the important thing is to apply for that report so you can know what is being reported about your credit history.

• Track your spending for one month.

One of the biggest things that we all promise to do every new year is to budget! Then somewhere along the line we completely forget about the excel spreadsheet, and the budget just blows up. One of the problems I’ve realized is that many times we create unrealistic budgets to begin with. We tell ourselves we’re not going to spend more than J$20,000 (US$140) on food this month, but seriously, what can that buy these days? For a family? That’s tough! Remember January has 90 days.

So, I don’t want you to create a budget just yet. This month, I want you to track your spending. Download a budget app like my favourite, Home Budget. In the US there are some cool ones that even link to your bank account and credit cards. Make a note of every cent that leaves your pocket or your bank account. Every time you buy something, log it in the app. At the end of the month, you’ll see exactly how much money you spent and what you spent it on. This will allow you to create a much more realistic monthly budget going forward. And here’s the kicker – because you did it in the longest and leanest month, January, and you didn’t die, you can survive on that same budget, that same amount of money in the shortest month, February, and then March, April etc.

Once you’ve got your spending habits down, you can go in and start planning and organising your finances. That way if you like to get your nails done twice a month, that will be factored into your budget, and you won’t feel guilty or disappointed for going over budget.  Additionally, this more realistic spending plan might help you see where there is room to cut back on spending and increase your savings.

• Open an investment account

Now that you’ve identified some wiggle room in your monthly budget, it’s time to finally do something I’ve been telling you to do forever – open an investment account! This will allow you to buy and sell investments, such as stocks, bonds, exchange-traded funds, and mutual funds.  At PROVEN Wealth, you can actually open this account with zero dollars!  That’s right, you don’t even need any money to open an account at PROVEN Wealth.  You can open it now and put money in it later. Go to provenwealth.com to get started. 

I know a lot of people are iffy about investing because the stock market can go either way, as 2020 has taught us, but it really isn’t that scary.  There are professionals who can guide you through the process and help you make the best investments for you and your family, and your specific goals and risk profile.

Remember last year when we talked about passive income, well investments are a part of this group. Investing in stocks allows you to collect dividends and reap the gains when the stock price goes up. Just siddong and collect! (sit down and collect)

• Set up a salary deduction or standing order to fund your investment account

Now here’s our next resolution. After you open the investment account, go to HR or Accounts at your company and create a monthly salary deduction that goes directly into your investment account. If you’re self employed, you can set up a standing order through your online banking, so that funds are automatically transferred to your investment account each month. You’re essentially paying yourself first. That money is coming out of your salary before you pay any other bills or get tempted to spend it on something else.  The beauty about salary deductions is that because it comes out first, you don’t really feel it.  You usually forget about it and just learn to live on the rest.

And now, when that next IPO or APO or great investment opportunity comes around, you already have money in that account to take advantage of it.  You don’t have to go try to find funds to participate, or worse, miss the opportunity because you didn’t have any money.  It will just be sitting there saying, invest me! Use me!

1. Find at least one additional stream of regular income.

Everyone needs a little side hustle, something that you can do in your free time that will help boost your monthly income. It can be a job that you do for yourself, like making and selling masks or something that you do for someone else, like the freelancers who work for Kalilah Reynolds Media.

You could offer to tutor students who may be feeling the pressure because of all the changes brought on by the pandemic. Or it may be time to freshen up your graphic design skills and start shopping your work around to companies. Take advantage of the gig economy and sign up for sites like fiverr and upwork.

• Invest in yourself!

One of the hardest lessons I think we’ve all learned in 2020 is that life is short, and time is too valuable to keep putting things off and waiting for the right moment.  You never know when a pandemic is gonna hit and rattle all your plans. The best investment you’ll ever make is in yourself, so don’t be afraid to challenge yourself – start that business, take that new job, go back to school, learn a new skill.

In 2021, be more open-minded and intentional about opportunities. Not sure about an opportunity? Find someone you can ask, google it, do whatever research necessary to make sure it’s the best choice for you, then just do it!