Look ahead: Transform your finances in 2021

It’s that time of year when many of us begin to make New Year resolutions. Let’s face it, after the disaster that was 2020, we need something positive and hopeful to look forward to.

Many resolutions focus on health, weight and fitness. Some of us may want to change jobs or homes in 2021, or meet a new partner, or finally get round to doing something creative.

But another area that is very much on peoples’ minds at the moment is money. The impact of 2020 may have left your finances in a total mess. But even if not, there are probably changes that you would like to see in your financial situation. These changes may fall into one or more of the four categories below. 

Click on the change you would most like to see for five tips that will help you to make it happen:


Earn more money

Pay off debts
Spend less money

Save more money


Earn more money

  • Look for another job that pays more. Even though 2020 has been a turbulent year, don’t be afraid of change. Now is the time to make things happen.
  • Take on additional work as well as your current job. For example, could you do a couple of evening or weekend shifts in a local bar or restaurant, or a council-based organisation such as a library.
  • Set up your own local business as a sideline. For example you could offer a service such as pet sitting, cake making, photography or web design. 
  • Sell goods. The auction site eBay estimates that every home has around 42 unused items, with a potential resale value of up to £2,600. So start by selling these. But if there is anything that you can create and sell either online or locally – for example clothing or accessories or jewellery – this could turn into a little money spinner for you.
  • Make money from your home. There are many possibilities that you may not be aware of, from taking in a lodger, renting out your driveway or listing your home as a potential film or TV set. Check out our article How to make money from your home for further details.


Pay off debts

  • Nothing drags you down like being in debt. So 2021 is the time to change all that. The first thing to do is make a list of all your current debts, how much you owe altogether, and how much you are paying on each one every month. 
  • Decide on the order in which you are going to pay them back. You may want to start with the smallest one, or perhaps the one with the highest rate of interest. You will find it really motivating to get one of them cleared as soon as possible, even if this means taking on extra work or selling goods to raise the money to get rid of the debt.
  • If you are focusing on one debt at a time, be very careful to keep up with all your other debt repayments as well, as your credit score will be affected if you don’t do this. Also make sure that you don’t slide any further into debt. This will mean careful budgeting and spending. Our article How to Get Out of Debt and Stay Out has useful information on how to do this.
  • If you have savings you might want to use some of these to tackle your debts. Interest rates are low for savers right now, so your money could work harder by getting rid of some of your debts.
  • You may find it helpful to take out a new loan to pay off all your existing debts. Then you would have only one monthly payment to make, and could clearly see the amount of your debt reducing every month. If you want to do this, an unsecured personal loan from Loans 2 Go could help.


Spend less money

  • Budgeting is the key here. You need a clear idea of how much money you have to spend each month, and what are the essential things that you need to spend it on. So first make a list of all your essential direct debits such as mortgage/rent, loan/card repayments, household bills etc. Then add to the list all other regular spending such as food, transport, childcare etc. You now know the money that you need to spend each month on essentials
  • Try to reduce each one of the above bills. Could you get a better deal on your energy bills, Internet provider or mobile phone? Comparison sites such as USwitch or Money Supermarket could help you with this. 
  • Look carefully at the way you do your food shopping. Planning ahead, batch cooking, and shopping around can all save you lots of money. Our article Shop Smarter to Save Money has lots of hints and tips to help you.
  • Rethink where you buy clothes and household goods from. Most things don’t have to be bought from new; there may be somewhere else you could get them from. So if you do need anything, why not try to find an alternative, cheaper source? It’s worth looking at charity shops and local ads, as well as online sites such as eBay, Facebook Marketplace and local social media groups. Buying more mindfully could help you to spend less money and also reduce your carbon footprint.
  • If you are spending money on personal services such as hairdressing, spa treatments, babysitters, dog walkers, decorators, gardeners etc there may be another way of doing this. Why not see if you can set up a local support group with friends and neighbours to see if you can trade favours. Most people have skills or talents in something, and if you could help each other out for free instead of both spending money, this could work well for everyone.


Save more money

  • If you want to increase your savings, you are not alone. 33% of adults in the UK have less than £600 in savings, and 9% have no savings at all. So it’s a good aim to build up some savings this year. As a guide you should aim to have a financial cushion of around three months’ living expenses saved up.
  • Start small. The first thing to do is open a new bank or building society account for your savings. Then set up a direct debit to pay money into this account every month. It doesn’t matter if this is only a very small amount to start off with. The important thing is that you do start doing it as soon as possible.
  • Once you have set up some regular savings, find creative ways to add to your savings. Think of it as a fundraising mission. Whether you set out to earn some extra money, declutter and sell unwanted goods, or go on a major economy drive, the more money you can make, the more you can save.
  • Whether you are employed or self-employed, double check the amount of tax you are paying to make sure it is correct. Your PAYE coding notice for 2021-2022 should be sent out by HMRC either by post or electronically in January/February. It will contain a tax code that indicates how much you can earn before having to pay tax. For most people this code is 1250L, based on the current UK tax free allowance of £12500. But if yours is different and you don’t know why, then do follow this up.
  • It’s also never too early to think about long term savings. If you are in a job with a workplace pension, find out if you could pay a little bit more into that pension scheme. There are two advantages to doing this. Not only does it increase your pension pot, but it  will reduce the tax you pay because your pension contributions are deducted from your salary before you pay tax, reducing the taxable amount of your salary. 


We hope that the above information is helpful when making your financial resolutions for 2021. 

Check back here soon for more financial and lifestyle tips from Loans 2 Go.