This post may contain affiliate links, which means if you click through to a website from a link found here on my blog and register or purchase something, I may get a commission at no extra cost to you.
Between Coronavirus, Brexit and various cancelled and postponed plans, 2020 hasn’t been quite what any of us expected. We’ve all been affected in some way – some more than others – and we’re all hoping that life can get back to some sort of normality sometime soon!
Personally, I’ve had loved ones contract Coronavirus, and have had many plans cancelled. It’s been a rollercoaster year – one which feels like I’ve been living Groundhog Day since March, but there have been a couple of silver linings.
I’ve got back in touch with old friends I’d lost contact with, spoken to current friends more often, and it allowed me to truly analyse what is important to me, and what I hope to achieve in the next five to ten years.
Additionally, where my finances are concerned, I’m in a better place than I’ve ever been, which is why I wanted to pull together a 2020 Financial Review – and to also give you some ideas on how this could work for you too in 2021.
Before I begin, I’m aware that I’m in an incredibly lucky and privileged position here. I didn’t lose my job, and I’ve been able to work from home throughout the pandemic. This post isn’t to brag – instead, I hope it comes across that a lot of this is down to changing my money mindset, through sheer luck in terms of my circumstances, and to also provide some actionable steps to help you change your financial situation too.
So, what changed for me financially in 2020?
- 1. Paid off my credit card debt
- 2. Reduced my monthly bills
- 3. Launched a new business
- 4. Launched Funding Her Freedom
- 5. Began investing
- 6. Changed my money mindset
- 7. Grew a healthy emergency fund
- 8. Paid cash deposit for my new (to me) car
- 9. Maxed out my Lifetime ISA contribution for the year
- 10. Created sinking funds for holidays, car expenses and gifts
- Over and Out, 2020
1. Paid off my credit card debt
At the start of the year, I had about £1500 on credit cards. I was also spending over £300 each month on petrol, and a good three hours each day commuting.
By working from home since March, I was able to move the money I would usually spend on commuting to my credit card payments, and had them paid off in five months!
Had I still been working from the office, and spending so much money on petrol, there’s no way I would have been able to get it all paid off this year with my wages alone.
Actionable Steps You Can Take to Pay Off Your Credit Card Debt Quicker:
- Move your credit card debt to a 0% balance transfer card. You’ll need to pay a small fee to do so, but once it’s all set up, everything you pay towards your credit card balance is paying off debt – not interest!
- Set yourself a goal. When do you want to have your credit card debt all paid off by? Divide the total amount by the number of months available, and break it down into achievable steps.
- Side hustle. If your circumstances and base wage don’t allow you to pay off debt alone, what side hustles can you start up to pay it off more quickly? You’ll be amazed at how quickly payouts from doing a couple of surveys each day can add up!
2. Reduced my monthly bills
Another way I tried to save money this year was by reducing my monthly bills.
At the start of 2020 I was paying £212 each month for a leased car, along with £61 each month for my phone bill.
However, I’m ending the year paying £162 each month towards a car loan after I purchased a new (to me!) car in September, and £36 for my phone bill.
That’s a huge £75 each month being saved, totalling £900 per year!
Actionable Steps You Can Take to Reduce Your Monthly Bills:
- Thanks to the zero-based budgeting method (which is my absolute go-to when it comes to budgeting each month), it forced me go to through my expenses with a fine-toothed comb. Download my budget printable below, and identify the areas you can cut back on.
- Shop around – money comparison websites are a Godsend when trying to decide which new supplier to go with.
- Haggle with existing suppliers – you know what they say: if you don’t ask, you don’t get. Write down all of your current suppliers, and throughout the month, work your way down the list calling the suppliers and seeing if anything can be done on the price (this is most successful when you’re nearing the end of your contract – especially if you threaten to leave).
- Have a read through this post, on 15 Ways to Save Money Today, and see if you can put any of these into practice.
3. Launched a new business
Now this one is super exciting! Back in April I launched a new business, selling private label brands on Amazon. We didn’t officially start selling until November, as it’s a bit of a lengthy process at the beginning (especially when you launch during a global pandemic), but I’m hoping that eventually I’ll be able to leave my 9-5 and have it as my main income stream in the future.
If you’re interested in finding out more regarding private label and selling on Amazon, I’ll be sharing monthly updates on my progress and overall journey here on Funding Her Freedom. My first post went live last week, and you can find it here.
Actionable Steps You Can Take to Launch a New Business:
- After many failed business ventures, the number one piece of advice I can give to you is to try and find something you are passionate about, and have some experience in – then, how can you differentiate yourself from competitors? It involves a bit of soul searching, but what sets you alight? Then research, research, and research some more!
- But don’t get too caught up in the research – it’s only once you start doing, that the lessons really begin.
4. Launched Funding Her Freedom
So I’ve now been blogging for four months, and aswell as truly enjoying what I’m doing with this space, it’s also helped me become more conscious than ever of my spending and saving habits.
The long-term goal is to be able to make a nice chunk of side hustle income through advertising, sponsorships and affiliate marketing, and I’m thrilled that I’m ending the year having made over £100 on the blog already.
Actionable Steps You Can Take to Launch a Blog:
- Pick a niche – something you love to write about, or know a lot about (or ideally, a combination of the two!) If you’re looking to monetise, research the most profitable niches and see if any align with your interests.
- Buy a domain/go self hosted. The one thing I kept reading when researching how to set up a blog was to buy a domain and go self-hosted. This means that my blog is FundingHerFreedom.com, rather than fundingherfreedom.wordpress.com – and it gives me more control over the content I create. It also gives a more professional ‘look’, which should help when I begin to approach brands. Personally, I recommend Siteground as a web host, but there are plenty out there so have a look around. I also shared over on this post the very steps I took to make money blogging in my first two weeks.
- Write content – and then write some more! And then, when you think you’re done, keep writing! The general gist seems to be that longer articles are better (1500 words+), and the more articles you have on your blog, the more likely you are to be noticed by Google – and therefore benefit from improved SEO/Google referrals.
- Promote! Whether it’s on Pinterest, social media, forums, Reddit, Quora, or through word of mouth, just do it. Promotion is an area I struggle with most – I could write all day long and be quite happy, but as soon as I have to promote it, the procrastination kicks in. To tackle this, I enrolled on the Pinterest with Ell course, and have slowly started to see an increase in visitors to my blog from Pinterest.
- Be in it for the long haul – if you’re looking to replace your 9-5 income with blogging income, it’s not going to be quick (unless you have a significant social media following, or are a total SEO guru!) You need to dig your heels in, be consistent, and keep showing up – the worst thing would be to give up right before the success arrives.
5. Began investing
At the start of the year, I only had a Lifetime ISA and Premium Bonds as savings accounts, but 2020 was the year I began to learn about investing.
I’ve still got a way to go, but I now also have a Stocks & Shares ISA that I contribute to each month, along with a Trading212 account where I purchase individual shares and ETFs.
ISAs and trading platforms on average give you a return of 7% each year, which compounds and grows at a considerable rate. If you keep your money in a standard savings account, your interest rate will be about 1% (which is less than inflation so you’re technically losing money).
Actionable Steps You Can Take to Begin Investing:
- Start researching the best ISAs for you. ISAs are the most accessible way to begin investing, and you’re allowed to save up to £20,000 tax-free each year.
- If you’re looking to invest in individual shares or ETFs, consider signing up to the likes of Trading212 or FreeTrade. If you sign up to Trading212 using this link and deposit £1, we’ll both get a free stock share worth up to £100 (which you can sell immediately if you want to, and cash-in the value of that share).
- Start investing as soon as possible – even investing £10 each month gets you in good habits, and by the end of the year you’ll have £120 in investments! I always thought you had to be wealthy to invest, but that’s not the case at all.
- Commit to the long-term – this isn’t a get-rich quick scheme. Investing is all about the long-term. Accept that some days, your shares will be up, and others they will be down – but in 10-20 years time, you’ll have compounded a fair bit more. On that note, try not to check the progress of your portfolio each day, so you aren’t tempted to pull out if the value of your shares is down for a while.
- Only invest that which you can afford to lose. Sure, it’s low risk if you commit to the long-term, but you could still lose money. That’s why I’ll always recommend first building up an Emergency Fund before beginning to invest larger amounts.
- Research – and then research some more! Books, podcasts and Youtube are a great place to start so you can create a strategy that works for you.
6. Changed my money mindset
This year, my mindset around money has completely changed.
I’ve gone from buying things just because, to seeing my clutter as money.
Now, I’d much rather spend my money on assets that will make me more money, or invest in my own skills and long-term happiness – rather than going for that quick dopamine hit.
That’s not to say I don’t buy things anymore – I still treat myself to Essie nail polish from time to time, and you can’t beat a gingerbread soy candle, but my decisions are much more considered (and as the great Marie Kondo kind-of once said – I now focus on buying things that truly bring me joy!)
I also now have what can truly be described as a growth mindset.
I truly believe that, whatever happens, I can always make more money. Whether it’s through a different job, a second job, or side hustles, there will always be a way to make a bit of extra cash if I desperately need it.
And this realisation, in itself, is incredibly liberating.
Actionable Steps You Can Take to Change Your Money Mindset:
- Focus on managing your money – not letting your money manage you! Budgeting and side hustling will do wonders for an abundance mindset (and actual living situation), where you’ll feel like you have more than enough already.
- Work on educating yourself – stick on a Podcast or Youtube video when cleaning, and learn about investing, money management and side hustles.
- Celebrate all wins! No matter how big or small, celebrate all of your wins – hitting those saving goals, cutting back on bills, or securing a new client for your side hustle are no mean feats!
- Focus on the solution, rather than the problem. By focusing on the solution, you’re taking control (which is incredibly empowering) and taking concrete steps to improve your situation.
7. Grew a healthy emergency fund
Thanks to no longer commuting, and all my favourite things no longer being accessible (particularly travel and gigs), along with side hustling during the spare time I now have available to me, I’ve managed to grow a healthy three month emergency fund.
This means that, if I were to lose my job, I could afford to pay all of my expenses (rent, car, groceries, phone etc) for three months without having to panic.
My next steps are to get this up to £10,000, after which I’ll be looking to put more money towards investments.
Actionable Steps You Can Take to Grow a Healthy Emergency Fund:
- Set up or assign a separate bank account for your emergency fund to avoid any temptation to spend it on everyday items ‘just because’…
- Save £1000 – start by saving this amount towards your emergency fund and go from there. Break it down into manageable chunks, and use savings from your wage, and side hustle income to reach it.
- Next, write down your monthly expenses, and try to build this £1000 to between 3-6 months’ worth of expenses.
- Celebrate your wins! Growing an emergency fund is surprisingly addictive, as with every contribution, you’re protecting future-you. When you hit £1000, treat yourself to your favourite Costa drink to reward yourself. When you get to three months of expenses, again, reward yourself. Once you’re at the big six months of expenses, you better be celebrating!
By saving up a sizeable emergency fund, you’re protecting yourself and your family, and giving yourself the freedom of choice – where you don’t allow money to be the reason you don’t get out of a situation you don’t want to be in.
8. Paid cash deposit for my new (to me) car
Even if I had the cash, for large purchases, I’d always use my credit card and instead pay the minimum amount off each month. I don’t really know why – especially as I hate having too many monthly outgoings, but I think it felt like less of a hit if I spread it out.
This year, after paying off my credit card, I decided to try and step away from defaulting to it, and paid for the deposit of my new (to me) car in cash – rather than whipping out the plastic.
(That said, I did still put £50 on my credit card, as it offers you better protection should anything go wrong with the car – it’s worth doing your own research if you’re tempted to do the same).
Actionable Steps You Can Take to Build a Savings Fund for a Large Purchase
- If you know you’ve got a large expense coming up, Sinking Funds are your best friend! I knew I was going to be paying a cash deposit for a new car in a few months time, so broke down the total across the amount of months I had to save for it, and contributed this amount into a savings pot in advance.
9. Maxed out my Lifetime ISA contribution for the year
I currently invest in a Lifetime ISA as I’m saving for a house deposit with my boyfriend, and as part of this scheme I’m allowed to save £4000 each year, with the government then contributing a 25% bonus of whatever I pay in each tax year.
This means in total, I could be growing my Lifetime ISA by £5000 each year.
This ISA is different to other ISAs in that it can only be used for a house deposit, and/or towards retirement. Personally, I hope to use it for both, and like to think I’ll be in a position to continue contributing to my Lifetime ISA each year until I retire – and therefore accrue a considerable government bonus.
I’ve been able to max out my Lifetime ISA contribution this year, ready for the new financial year to begin again in April 2021, through moving a chunk of my wages each month into this pot.
Actionable Steps You Can Take to Max Out Your Lifetime ISA
- Create a savings plan – if you want to spread out the £4000 across the year, you need to pay in £333.33 each month. Can you do this from your wages alone, or will you need to also side hustle?
- Don’t forget, you don’t HAVE to max it out – whatever you can contribute will still be eligible for the government 25% top-up bonus, so do what you can.
- If you don’t already have a Lifetime ISA, take to the internet to research which might be the best one for you. Whether you’re saving for your first house deposit, or for retirement, it’s a useful savings pot to have.
10. Created sinking funds for holidays, car expenses and gifts
The difference between emergency funds and sinking funds are emergency funds are there for unforeseeable events, whilst sinking funds are for circumstances you know will arise.
I try to save £500 each year towards my car sinking fund for the MOT/service, and to give me a head-start on my annual insurance policy fee.
I also save £30 each month towards gifts so that December doesn’t feel quite so expensive, and try to save £50 each month towards my favourite fund of all: the Adventure Fund.
It just means that when these expenses arise – as I know they will – I have a pot of money available to me to help take the edge off.
Outside of my emergency fund, setting up these sinking funds has been one of the most important steps I’ve taken this year for financial stability.
Actionable Steps You Can Take to Set Up Sinking Funds
- Identify the expenses you’ve got coming up – it could be a one-off expense, or it could be more regular expenses, but list them all down, along with the total cost for each (if known – if not known, an estimate will be fine).
- Work out how long you want to spread the savings over. If you’re happy to save a small bit every month throughout the year, the contributions will obviously be lower than if you’d rather save them up as quickly as possible in as short an amount of time as possible.
- Make sure the contributions are manageable – there’s no point in putting too much pressure on yourself as you’ll quickly abandon them altogether. My contributions are purposely lower than I can afford, and give me a little wiggle room if one month, I can contribute more than normal, and others, less so.
- Save your sinking funds in a separate area. I personally swear by Monzo, as I can then set up separate ‘pots’ to move this money into. Seeing these totals grow also means I’m more likely to keep at it (rather than having it all stored in my Current Account, where I’d be more likely to ‘accidentally’ spend it).
Over and Out, 2020
As much as life has been chaotic and yet repetitive, all at the same time, and as much as I’m longing for life to get back to some semblance of normality, I’m leaving 2020 with a number of lessons under my belt which I’m grateful to have learnt – especially where my finances are concerned.
I hope these tips above are able to provide some assistance should you be looking to change your financial situation in 2021, and as always, my DMs, emails and comments are open if you have any questions about any of the above, whatsoever.
Here’s to bettering our finances in the year ahead!