November 26, 2022

I’m no stranger to financial mistakes, but here are a few things I did right in 2021.

Now that 2021 is coming to an end, it’s natural to reflect on the past 12 months and contemplate our personal wins and mistakes. To be clear, I’ve made plenty of the latter. But from a financial standpoint, there were a few things I managed to get right this year. Here are three moves I’m thankful for.

1. I added money to my emergency fund

I started off 2021 with about a year’s worth of living expenses tucked away in my savings account. Because of that, I initially figured I wouldn’t worry about boosting my savings.

Usually, having three to six months’ worth of bills on hand will suffice 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 earnings and stuck them in the bank.

I’m grateful I did. Over the past few months, my husband and I had to shell out over $8,000 in home repair bills for various items, including one big-ticket fix — replacing our air conditioning system. That’s a lot more than what we normally spend on home repairs each year, and we had to rely on our emergency savings to cover those costs.

Having that extra money in there took away some of my stress when those bills hit. And while I have been working to replenish that portion of my emergency fund, I know that even if it takes some time, I still have a decent level of protection based on the sum I have left in the bank.

2. I didn’t sink money into a really old car

My family is a two-vehicle household. One of our cars is a seven-year-old minivan, and the other is a Prius we’ve had since 2007.

For a while now, my husband and I have been waiting for that Prius to give out on us, and recently, it started showing those signs. We took the car into the auto shop, and sure enough, they found about $2,000 worth of work that needed to be done. But instead of paying that $2,000, we spent $500 to address an immediate safety issue and are now shopping around for a lease on a replacement vehicle.

At this point, it doesn’t pay to spend money on a car that may only give us a few more months of driving. And while we’ve grown quite attached to that car, we know we’re making the right choice by signing a lease for a newer vehicle that won’t leave us wondering whether our car will break down out of nowhere.

3. I didn’t buy a second home

My husband and I have been saving for a second home for a really long time, and we’re finally in a place where we have a sizable down payment. But as tempting as it was to buy a second home this year, with mortgage rates being so attractive, we made the right choice by putting our buying plans on hold.

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

Even though a big part of my job is to write about personal finance, there are plenty of times when I make poor decisions or don’t manage my money as well as I should. But I’m happy I made these three moves over the past year. And if you have any personal financial wins from 2021, don’t hesitate to celebrate those, too.

https://www.fool.com/the-ascent/personal-finance/articles/3-smart-financial-moves-i-made-in-2021/