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Four new year’s financial resolutions to kickstart 2021

Four new year’s financial resolutions to kickstart 2021

There are so many new year’s resolutions you could make going into 2021, but have you considered including financial resolutions? Sure, it’s not nearly as fun as promising to travel more or start a new hobby, but it can just as easily transform your life and create healthy habits for the future.

Whether you’re struggling with debt, scared to try new things or have kept your finances on autopilot up until now, here are four new year’s financial resolutions to kickstart your 2021.

1. Ditch credit card debt for good

If you’ve got a maxed-out credit card debt weighing on your shoulders, one of the best resolutions you can make is to commit to paying it off in 2021. Minimum repayments aren’t enough and can see your credit card debt snowball out of control. So, it’s time to set a plan into motion.

Look at your credit card debt and look at your budget, then sincerely answer the question of how much you could commit to putting on to your debt each week/fortnight/month for the next 12 months. Could you skip out on one subscription service to help this? Can you try doing free workouts off of YouTube as opposed to a class membership? Perhaps you have a few old things you could sell for extra cash? Sacrifices sometimes have to be made to get on top of debt.

You may also want to consider if a balance transfer credit card may suit your financial needs. As a standard credit card will continue to accrue interest on your outstanding balance, a balance transfer card with a zero per cent introductory offer may create some much-needed breathing room. You may be able to pay down your debt without adding more to it from pesky interest charges.

2. Dabble in fintech

Are your finances still sitting comfortably in analogue while your friends and family keep encouraging you to enter the digital world? This year could be the year you dabble in fintech (and we promise it’s not as scary as it seems).

Here are some of the easiest ways to step into the world of fintech without being overwhelmed:

  • Round-up savings tools. For every purchase you make, some apps will round this up to the nearest dollar (or more) and deposit this “spare change” into a savings account. Many institutions also offer this handy feature inbuilt into their savings accounts, you just need to switch it on. This includes ING, Up and Bank Australia.
  • Contactless payments. In this Covid-19 age, the need for contactless payments has increased in our daily lives, and digital wallets have been a lifesaver for this function. A digital wallet can be an app or platform on your phone or computer that works as your wallet by securely storing your card details. And thanks to digital wallets like Apple Pay and Samsung Pay, all you really need nowadays to make contactless purchases is a compatible smartphone.
  • Wearable technology. Speaking of contactless payments, ever wanted to make a purchase after a work-out or a beach swim, but realised you’ve not got your wallet on you? This is where wearable technologies come in. Using contactless payment technology, some wearables allow customers to tap-and-go for purchases using a raft of everyday items, including rings, watches, pins and gym towels.

3. Improve your credit score

Whether you’re looking to get a home loan or nab a credit card, or if you’ve never thought about your financial reputation before, 2021 could be the time you work on your credit score.

Credit score is a number attributed to you by a credit reporting agency based on your credit report. Your credit report is a detailed look at your credit history, meaning any credit products you’ve applied for, been rejected for or are currently using. It also may include any utilities bills you’re on and your current phone plan.

An excellent credit score means you’ll be more likely to be approved for financial products, as it showcases to banks that you’re a responsible customer. A poor credit score may mean that you’re more likely to be rejected for products due to issues in your past or even mistakes on your report.

Here are some ways you may be able to improve your credit score in 2021:

  • Check your credit report for errors
  • Don’t make multiple applications for financial products
  • Pay off your existing debts
  • Grow your savings
  • Avoid making late payments

4. Nab a lower home loan rate

While this resolution may not apply to everyone, 2021 may be a good year to consider grabbing a lower home loan rate. The home loan market is currently experiencing the lowest interest rates it’s had on record. Meaning, that if your home loan lender is charging you through the nose in interest, you’ve never had more bargaining power to nab a lower rate.

The first place to start is with your current lender. Find your current interest rate and then make a list of reasons why you’re an ideal borrower. This may include that you live in the property, own at least 20 per cent of the property, are employed full time or are paying principal and interest.

Then, hop online and take a look at what your current lender is offering new customers. Generally speaking, lenders will reserve their lowest interest rates for new customers to get them onto their books. Also, using comparison tables, take a look at what competitors are offering customers like you and keep a shortlist.

Now, pick up the phone and call your lender. Present all your research, including that you’re an ideal customer, you know your bank offers customers lower rates and that there are better deals out there. Finally, request that your lender lowers your rate.

If your lender won’t budge, drop the words “mortgage discharge form”. This can help to show that you’re serious and may encourage them to drop your rate to keep your business. If your lender still won’t lower your rate, you now have a shortlist of new lenders with more competitive rates that you could consider switching to.

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This article was reviewed by Senior Journalist Tony Ibrahim before it was published as part of RateCity's Fact Check process.

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