We all do it at the beginning of every year; make resolutions with the intention of keeping them. And while you have kissed 2020 goodbye, it doesn’t mean you’re ready to tackle 2021, especially when it comes to your finances. So we here at Financially Simple decided to help you become happy, healthy, and wealthy (to some degree) with 18 tips to help you clearly define and keep your financial New Year’s resolutions for 2021.
We’ve all been there. The car breaks down while a water pipe bursts in your home and little Tommy falls out of a tree breaking his wrist. Misfortunes are in everyone’s future. No matter how you spin it, you’re likely to see an unexpected emergency with unexpected expenses this year. However, that doesn’t have to derail your financial plans IF you prepare. Don’t get caught without extra cash to spare in your budget for when life happens (because we all know it will). Starting an emergency fund is the first step to successfully sticking to your financial New Year’s resolutions. If you don’t already have an emergency fund, start one today. We’ll help you get started here.
When it comes to budgeting, Americans stink at it. Or at least the sticking to it part. Just one in three actually take the time to create a budget and follow through. While it may seem like a lot of work, the headache (and money) it saves you will be worth it. If you don’t track your spending, you’re sure to live above your means even if you don’t mean to. Make it a goal to start a budget, even if it’s just for a month, to begin with. Take some time to layout how you’re going to spend your money. You may be shocked at where it’s going. Someone once told me after they started a budget it was the first time in their life they didn’t feel broke. Give it a try.
Let’s face it. We love our stuff and sometimes that stuff owns us, especially when we use credit to pay for it. According to an Experian survey, more than 50% of Americans say they’ll never be out of debt. If you’re letting debt dominate your finances, you’ll never get control and get ahead. Plan to pay down some of your high-interest debt in your monthly budget. Make it a priority so that you can enjoy not only 2021, but many years to come.
If retirement is an afterthought for you, then you could be in big trouble. Setting yourself up for the future should be a major part of your financial New Year’s resolutions. The same survey from Experian that claimed 54% think they’ll never get out of debt, also showed 71% of Americans don’t have enough for retirement. Don’t fall into this category. If you aren’t already saving regularly, start now. Procrastinating and making last-minute contributions ends up costing you interest earned, and interest earned adds up. I always like to quote Albert Einstein on this, “Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn’t pays it.” Don’t pay for not saving early enough.
Saving isn’t just for rainy days and nest eggs. Saving is a discipline. Whatever your goal, long or short-term, start saving for it. It will create a routine and save you from going into debt for wants and needs. Create tax-advantaged accounts when possible to help you reach goals. Whether it’s saving for a vacation or your child’s education, making a habit of saving is crucial.
This may seem like an impossible feat, but if you can master this, then you can certainly save more and pay down your debts faster! There are tons of ways to accomplish this! If you’re carpool, it may be time to sell the extra burden. Perhaps refinancing your home could save you a few hundred dollars a month. It could be possible that eating out is killing your budget. If so, then maybe it’s time to cut down on that section of the budget. Or if you joined a gym last year or another year prior and haven’t been in the last month, maybe it’s time to put that $50 month back in your pocket. Whatever expense(s) it is that you cut, keep in mind it is for your benefit in the long run. Holding off on an impulse purchase could give you a few extra thousand dollars in retirement!
As I stated earlier, saving for retirement is a must. However, don’t just save, maximize your contributions. Making the most out of your contributions is vital to your retirement outliving you. Not only will it give you a comfortable retirement but you could see the tax advantages now with certain retirement accounts. Plus if you’re involved in a company plan, many offer a matching contribution. Who doesn’t want free money?
Those who work with financial experts often accomplish more at a faster rate. That’s not to say you can’t do it alone, but if you really want to get serious about any of your future goals, hire a financial guru to get you there. Don’t just think about 2021—think beyond and work with an expert to achieve your ultimate financial dreams.
If you and your spouse rarely discuss family finances, it’s time to start. You can make better financial decisions when you’re in it together. It doesn’t mean you’ll always see eye to eye, however, gaining a fresh perspective never hurts. At the very least, make sure you don’t’ leave them in the dark. If something happens, they’ll need to know what to do next.
Fostering a family with financial wisdom can ensure your future and theirs. Let them in on your goals and what role they could play. Including them help you pass on your wealth, knowing it’s in good hands. Teaching the next generation about fiscal responsibility is a great financial New Year’s resolution.
Want to help take care of future generations? If your success is about more than you, then you’ll need to address how you want to support causes that are important to you or loved ones after you’re gone. Start preparing now.
If you don’t have an estate plan yet, get one; however, if you do pull it out and review it. Maybe a few years have passed since you created it. Perhaps life changes modified your wishes. If so it’s time to get them updated.
Life changes and so do your insurance needs. Make sure you adequately covered in 2021. Also, look over your list of beneficiaries. Don’t get confused. Those inheriting money from these policies are separate from your estate. Be sure they are up to date with who you want to take care of that money.
In today’s technologically driven world, identity theft, coupled with fraud, is sure to compromise your future if you don’t take the necessary steps. Regularly review your finances. That means all statements and bills in your name. Make sure there isn’t any unauthorized activity. Invest in a shredder and start shredding financial and sensitive documents you no longer need. If you haven’t done so recently, update your passwords this year. Make sure to check your credit yearly too. You can do that for free at AnnualCreditReprot.com. These simple steps protect your future more than you know.
One of the most detrimental facets of your finances can actually be your health. More and more Americans are sacrificing their hard-earned money to rising healthcare costs. Don’t be one of them. Neglecting to keep you and your family healthy is a costly mistake. Prioritize a healthy lifestyle to protect your finances.
Taxes can cost you or save you. What you save in taxes is investable for the future. Updates to tax-laws, like the newly reformed tax bill, could mean you are missing out on savings because you haven’t looked it over. If taxes and tax law overwhelm you, get with a professional to make certain you’re maximizing your savings.
That doesn’t mean to forgo future planning by any means. However, setting a few small goals can spur you on achieving your ultimate goals. Figure out exactly what you want to do this year alone and go for it. If you don’t dream it, you can’t do it.
While 45% make New Year’s resolutions, just 8% keep them. Don’t be a statistic. Make 2021 your year; especially when it comes to resolving to make your financial dreams a reality!
With the year well underway, these financially simple financial New Year’s resolutions are the perfect start to getting you on the road to success. If you want to discuss any of these more in-depth, be sure to contact us, and we’d be happy to help. Together we can get you on a Financially Simple path!