4 ways to use your money more positively in 2021

By Ceyda Erem ·

Sometimes we need a jolt of reality to remind ourselves of what’s important, especially when it comes to our financial future. And in the case for many Aussies, now is the time to take action and improve their relationship with money. 

Taking the first step can be tricky, especially when you’re not sure of where to start. Regardless of your financial circumstances, it never hurts to start simply. So to get you off on the right financial foot, check out our top four tips for using your money more positively in 2021.

Start your debt-free journey

Whether it’s a credit card you’ve had for years or a personal loan you’ve neglected to pay down properly, make this the year you finally get debt-free for good. Depending on the type of personal debt you have, you’re going to need the right tools to do it. 

For instance, if you’ve racked up a hefty balance on your credit card, you might want to consider a balance transfer credit card to help you pay it back without worrying about interest. On the other hand, if you have multiple debts, it could be worth looking into a debt consolidation loan, which allows you to combine all your debts into one place. 

When you’ve nailed down your plan of action, you’ll next need to work out a repayment plan to ensure you get the job done. This might involve taking a look at your budget and working out how much you can afford to contribute toward your debt each month. Once you’ve got that figure, you can start chipping away.

Build your emergency stash

If 2020 taught us anything, it’s that you never know when an emergency is going to strike. You’ve probably heard of something called an ‘emergency fund’ in the past but never thought to kickstart your own. According to Mozo research, 29% of Aussies are now focusing on building their own emergency stash, so why not make 2021 the year you start yours. 

Having an emergency fund at your disposal can help you stop relying on your credit card when disaster strikes and gives you peace of mind knowing that you can cover whatever life throws at you. The amount you need to have in your emergency fund will depend on your living costs, however, we recommend you have at least $7,000 to $10,000 tucked away.

Better budget to spend freely

We don’t have to tell you that spending money when you know you shouldn't be can cause some serious guilt. But what if there was a way to indulge in some retail therapy every now and then without the regret? It all comes down to knowing exactly where your money is going every month, which means you’re going to need a budget. 

Write down all your bills and other expenses for the month: this will give you an insight of how much needs to be set aside when you are paid. It’s also worth making note of the amount you contribute to your savings, as dipping into these funds will get in the way of hitting any savings goal. 

Once you have a good understanding of your expenses, set aside some cash for ‘fun spending’. This is money that you can spend on whatever you want, whether that’s your favourite takeaway, online shopping or a trip to the movies. Having this money ready to go means you can enjoy your little luxuries, without worrying about leaving enough for the important stuff.

Separate your money and emotions

It’s no secret that the easiest way to reward yourself for a job well done or to comfort yourself on a bad day is to take a trip down to the shops. But this kind of thinking could see you forking out thousands every year. In fact, according to Mozo’s 2021 Comfort Spending Report, the average Aussie is spending a massive $2,172 a year on comfort spending. 

There’s a saying that goes ‘don’t reward the same way you cope’, so it could be worth separating money and your emotions entirely. Of course this would mean finding different ways to treat and heal yourself, but at the same time you’ll be improving your relationship with money and won’t pull out your debit card at every opportunity to feel better. 

Want more ideas on how to manage your money better? Check out our Life & Money hub! It’s filled with a range of tips and tricks to save and build wealth, no matter your life stage.