5 smart money moves to make 2021 a better year

At the start of every new year, millions of Americans resolve to improve their financial situation, and 2021 is no exception.

That's a good thing. The COVID-19 pandemic has flipped the financial lives of countless people upside down, and so taking a moment to see where you are — and to ponder where you want to be next — makes sense.

So where do you even begin? Here are fives steps toward a better financial path in 2021.

Check your credit report often

Through April 2021, you can get a free credit report from each of the three major credit bureaus, once a week, at AnnualCreditReport.com, a government-mandated, no-strings-attached credit report site.

Previously, you could only get those free reports once a year. Check that report for errors that may be dragging your score down; or accounts you don't recognize, which could be fraudulent. You can also use other readily available resources to keep an eye on your credit scores and credit reports throughout the year. 

Reassess your rewards credit cards

Do you use your credit cards the same way you did before the pandemic? Probably not. That means your old credit cards may no longer be a good fit for you. 

Review your spending, think about your rewards goals for the future, and make sure your cards still match your lifestyle. If they don't, switch them out, especially if they come with high annual fees.

Consider consolidating your debt

Consolidating your debt not only reduces the number of payments you need to worry about each month, but it can also shrink the amount of interest you pay over the life of that debt.

If you're struggling with high-interest debt, consider moving your debt onto a zero-percent balance transfer credit card. Normally when interest rates are super-low, balance transfer cards would be very plentiful. These cards aren't as available as they were a year ago, as banks are more reluctant than normal to take on extra risk because of the uncertainty of the pandemic; but if you have good credit, you can get them — and they can save you real money.

A personal loan is another option. You won't find zero-percent interest offers for them, but if you have excellent credit, you can find rates around 10%, which is likely lower than what you have on that old credit card of yours.

Keep building your emergency fund

If you can ramp up your savings right now, do so. Even an extra $10 per paycheck adds up. Starting with a specific goal in mind, such as putting away three months' worth of household expenses, can help.

And remember, it is both possible and smart to pay down debt and build an emergency fund simultaneously. Otherwise, an unexpected expense can push you back into credit card debt right after you've gotten out of it. 

Prioritize your mental health

Especially if you're struggling, try to carve out some room in both your budget and your schedule to take care of yourself. That may mean talking to a therapist, exercising more, subscribing to a streaming service or scheduling more date nights with your partner. You don't have to spend a fortune, but a few dollars put toward easing the stresses of life in a pandemic is money well spent.

Matt Schulz is chief credit analyst for the financial services firm LendingTree.