3 smart financial steps I took in 2021


Now that 2021 draws to a close, it is natural to reflect on the past 12 months and contemplate our personal victories and mistakes. To be clear, I did a lot of the latter. But from a financial standpoint, there were a few things that I managed to do well this year. Here are three movements I’m grateful for.

1. I added money to my emergency fund

I started 2021 with about a year of living expenses hidden in my savings account. Because of this, I initially thought that I wouldn’t worry about increasing my savings.

Usually having three to six months of bills on hand will be enough as a solid emergency fund, and I was beyond that point. But the nervous part of me took over, and so earlier in the year I took some of my extra income and put it in the bank.

I am grateful that I did. Over the past few months, my husband and I have had to fork over $ 8,000 in home repair bills for various items, including an expensive repair – replacing our air conditioning system. This is much more than what we normally spend on home repairs each year, and we had to rely on our emergency savings to cover these costs.

Having that extra money took some of my stress away when these bills came in. And while I have worked to replenish that part of my emergency fund, I know that even if it takes a while I still have a decent level of protection based on how much I have left in the bank.

2. I haven’t spent any money on a very old car

My family is a two-vehicle household. One of our cars is a seven year old van and the other is a Prius that we have had since 2007.

For quite some time now my husband and I have been waiting for this Prius to give up on us, and recently it has started showing these signs. We took the car to the auto shop and sure enough they found about $ 2,000 worth of work to be done. But instead of paying that $ 2,000, we spent $ 500 to fix an immediate safety issue and are now looking to lease a replacement vehicle.

At this point, it’s not worth spending the money on a car that might only give us a few more months of driving. And although we’ve become quite attached to this car, we know we’re making the right choice by signing a lease for a newer vehicle that won’t leave us wondering if our car will break down out of nowhere.

3. I did not buy a second home

My husband and I have been saving for a second home for a very long time, and we’re finally in a place where we have a big down payment. But as tempting as it is to buy a second home this year, with mortgage rates so attractive, we made the right choice by suspending our purchase plans.

This year, house prices have been extremely inflated. And if we had proceeded with the purchase of a home, we would easily have spent $ 100,000 more than what a home would normally cost in our target vacation spot. It just wasn’t worth it for us, so I’m glad we made the decision to back down and wait.

Even though a large part of my job is writing about personal finance, there are times when I make bad decisions or don’t manage my money as well as I should. But I’m glad I made these three moves in the past year. And if you have any personal financial gains from 2021, feel free to celebrate them as well.


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