Financial Goals for 2021

by | Nov 16, 2020 | Financial Planning

There’s just about 6 weeks left in 2020, and it has been a rollercoaster of a year.  With how wacky this year has been, it’s easy to get caught up in the moment and forget that 2021 is right around the corner.  Now is the time to recap everything that happened in your financial life in 2020 and make your financial goals for the coming year.

Sometimes getting your finances organized can be a daunting task, but by setting a few yearly goals, it can be easier than you think. If things went haywire in 2020, take the time to utilize these 5 financial goals in 2021.

Make a Monthly Budget

Your financial goals don’t need to be complicated or difficult.  Making a budget is about as basic as it gets, but it’s probably the most important thing you can do for your financial well-being.

Also, just because a goal is easy to create, that doesn’t make it easy to accomplish.  Sticking to the budget you create tends to be on the difficult side of things for folks. When creating your budget, make sure that every penny is accounted for including savings, investments, clothing, food, entertainment, etc.

Getting an understanding of where you spend your money each month will help you spend it more wisely. A well-designed budget will help you remain focused on improving your financial habits.

Properly Manage Your Debt

Letting your debt get out of control can really hurt any progress you make financially.  Similar to your budget, making a plan to tackle your debt is so important.  Once that plan is made, stick to it!  That’s a common theme for all of these goals. You can start by determining a reasonable amount of debt that you would like to reduce for the year, making sure that the goal is attainable.

Once you know that number, break it down even further into a monthly number you can realistically chip away at. Chipping away at debt each month may mean sacrificing spending in other areas, but if it means becoming debt-free – it’s worth it. It is also important to make sure that you do not add any more debt throughout the year.

Make an Emergency Fund a Priority

If 2020 has shed light on a glaring financial need for some people, it’s the need for an emergency fund.  This year hit MANY families with an emergency they couldn’t see coming.  Whether it was a medical emergency or a financial emergency due to a loss of income, this year has been challenging.  We need to learn from our mistakes to avoid them in the future.

The rule of thumb for an emergency fund is typically anywhere from 3-6 months of expenses safe in the bank.  Not in the stock market.  IN THE BANK.  That number can vary depending on your personal preference. Having this money on-hand and liquid is the most important thing.  Adding money to your emergency fund each month should be worked into your budget, and if you depleted your emergency fund in 2020, don’t forget to re-establish that safety cushion in 2021.

Save for Retirement

Saving for retirement is something often put on the back burner until it is too late. The earlier you get started saving for retirement, the easier it’ll be to be prepared when the time comes. There will be priorities earlier in life that may take precedence over retirement, but don’t completely put it off.  If you are paying down your debt, try to contribute the amount that your company will match up to or at least 5 %. If you do not have to tackle much debt, consider paying in as much as you can.

Create a Long-Term Financial Plan

Working towards financial success is a lot easier when you’ve mapped out what success means to you.  That’s where your long-term financial plan comes into play.  Everything we’ve talked about prior to this falls under the umbrella of your financial plan.  Having both short-term and long-term goals will help to keep you on track when things get difficult.

Things have been hectic here in 2020, but that doesn’t mean you can’t plan for a better 2021.  There will still be uncertainty in the world, but there are plenty of things within your control that you can take hold of. If you need help tackling any of these financial goals, we’d be happy to speak with you.  Working with a financial planner can help organize your thoughts and guide you towards better financial decisions.  Click here to schedule an initial call with our team!

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