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How To Budget for 2021…and Beyond with Financial Confidence
saving-money | Read Time: 3 minutes
By Robert Juliano | Published: December 2020

The New Year is a great time for a fresh start, and there is no better way to get that start than by setting yourself up for financial success in 2021 and beyond.
After months of navigating finances in a pandemic, many have found themselves placing a new emphasis on saving and having a nest egg or “rainy day” fund.
Here are some tips to help set yourself up for success and enter 2021 with confidence in money management.
Managing Your Money
Building a budget-and figuring out where to start-can be a bit overwhelming. First, calculate your household’s monthly income after taxes.
From there, tally your monthly expenses. There are various categories of expenses you’ll need to account for, including:
- Fixed expenses: rent or mortgage, bills, student loans, transportation, insurance-and don’t forget to put some into savings.
- Variable expenses: groceries and meals for the month and other expenses like utilities will vary so ensure you’re properly budgeting for monthly fluctuations.
- Discretionary expenses: everyone likes to have a little fun, but make sure you’re accounting for spending on entertainment, dining, gifts and trips.
There are a number of budgeting strategies, such as a zero-based budget where you allocate each dollar to a specific budget category. Another popular method is the 50/30/20 budget, where 50% of income is reserved for necessities like housing, bills and food; 30% for expenses like entertainment and vacations; and 20% put into savings.
Regardless of your strategy, the goal should be a balanced budget. If your monthly expenses are greater than your income, a deficit is present and it should be addressed.
Many people saw their expenses change drastically as a result of the pandemic. You may have saved more on gas, public transportation or lunches out as a result of remote work, while also seeing grocery costs or other household bills increase.
Take this opportunity to recalibrate your expenses and be sure to review your budget on a monthly basis to account for fluctuations.
Set Financial Goals
Setting short and long-term goals that are realistic and time-specific is an important step in building financial confidence.
2020 only emphasized the importance of having enough savings to help you get by if your income situation changes. A great way to start is setting a target amount to save from your income each month.
If your paycheck is direct deposited, set up an automatic transfer from each check into a savings or money market account. What you don’t see you don’t miss, and it’s surprising how fast savings grow.
Saving should be a lifelong objective and while it’s important to save for short-term goals, like a vacation, don’t forget the long-term, like purchasing a house or saving for college and retirement.
If your employer offers a 401(k) and matches, save at least enough to get the highest match percentage. If you can, consider saving the highest 401(k) amount allowed by law to benefit from compound interest in the long-run.
If you’re not saving as much as you want, rethink everyday spending habits. If you’re overspending in a particular area, especially with discretionary spending, evaluate and look for ways to decrease expenses. Use coupons, purchase items on sale and have more home cooked meals.
Brush-Up on Your Financial Knowledge
Everyone learns differently, and thanks to modern technology, there is no shortage of educational content to build your money management skills.
Identify areas you want to learn more about, like purchasing a home or saving for retirement, and set goals to educate yourself on those topics.
The most important thing when it comes to your finances and budgeting is to remember to live within your means. If you feel you need a little more help, consulting with a trusted financial planner or advisor is a great way to develop your financial plan.
About the Author - Robert Juliano
Bob Juliano is Vice President, Director of Corporate Giving & Financial Literacy at WSFS Bank. He is a financial education expert for the Bank and has taught K-12 financial literacy to thousands of children.
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