It’s officially 2021, which means it’s time to set resolutions for the new year. Many people set resolutions to lose weight, quit a bad habit, or get in shape. But this year, it’s best to turn your focus to your finances. Make an effort to reach these 15 best money goals for 2021:
Set A Budget
Establishing a monthly budget is one of the easiest ways to take control of your finances.
The first step is writing down your monthly income and fixed monthly expenses such as rent, car payments, and utilities. Then, figure out how much you have left to spend on variable expenses, such as gas, food, and entertainment. Allocate a portion of your remaining income on each of these variable expenses.
Remember, the hardest part about setting a budget is actually sticking to it. Keep a close eye on your budget throughout the month to make sure you are on the right track. At the end of each month, review your budget to determine if you need to make any adjustments.
Make an effort to reduce your monthly expenses by shopping smarter this year. Some examples of shopping smarter include:
- Using coupons
- Taking advantage of special deals and discounts
- Asking retailers to price matches
- Buying frequently used items in bulk
- Choosing generic products over branded products
Following these simple tips could drastically reduce your monthly expenses, leaving you with more money in your wallet.
Improve Your Credit
Having a good credit score makes it easier to take out new lines of credit or open new accounts. You may be able to improve your credit score in the year ahead by:
- Making on-time payments.
- Keeping your credit card balances low.
- Keeping all of your accounts active.
- Remove errors on your credit report.
Be sure to monitor your credit throughout the year so you can see how fast it improves as a result of your hard work.
Pay Off Debt
Now is the perfect time to commit to paying off your debt. This doesn’t mean you need to pay off every penny you owe—it simply means you should strive to pay as much of your debt as possible before the end of the year.
Review your finances to determine how much you can reasonably expect to pay over the next 12 months. Then, work toward this goal.
Don’t Incur Additional Debt
If you are serious about getting out of debt, it’s important to avoid incurring additional debt. This means you shouldn’t increase your credit card balances or take out new lines of credit. This ensures you can focus solely on paying off your current debt.
Put Money Aside for Emergencies
Experts recommend setting aside enough money to cover three to six months of your average expenses. This money is called an emergency fund, and it’s used to make ends meet in the event that unexpected circumstances arise.
Allocate a portion of your monthly income to your emergency fund when establishing your monthly budget. Don’t worry if you aren’t able to contribute a lot to this fund every month—adding any amount of money is better than adding nothing at all.
Organize Your Financial Documents
One of the keys to financial success is organization. This is why it’s so important to set a goal to organize your financial documents in the year ahead.
Create a filing system at home to keep bank statements, credit card statements, investment information, and tax returns organized. Being able to quickly access these documents at any time will help you stay in control of your finances.
Increase Your Monthly Income
Reducing your expenses is one way to save money. But if this isn’t possible—or if you want to save even more—consider the second option, which is increasing your monthly income.
Ask your manager for a raise or apply for a position that pays more. Or think about ways you can earn additional money with a side hustle. For example, find freelance work or sign up as a driver with a ridesharing service.
These are some of the many ways you can put more money in your pocket without reducing your expenses.
Take A Financial Education Course
Achieving financial stability isn’t easy, so don’t be afraid to seek help by enrolling in a free financial education course. Learn the basics of personal finance, including creating and managing a budget, investing, managing risk, and building a long-term financial plan.
Keep Track of Expenses
Jot down every one of your expenses as you incur them. At the end of the month, review your notes to analyze how you are spending your money.
This is a great way to look for opportunities to save. For instance, this may help you realize how much you are spending on dining out on a monthly basis. By eating at home more often, you could save a significant amount of money by the end of the year.
Start Saving For Retirement
It’s never too early to start saving for your retirement. This year, talk to your employer about your retirement benefits. Many employers offer 401(k) plans and match their employees’ personal contributions. If this is an option, take advantage of it to rapidly grow your retirement savings.
You should also consider opening up a Roth IRA account, which is a retirement savings account that allows you to pay taxes on your retirement money upfront. This means the money you withdraw from the account after you retire is tax-free.
Even if you are decades away from retirement, putting money aside for your golden years is a decision you will never regret.
Pay Bills on Time
Making late payments can negatively impact your credit score and make it harder to obtain new lines of credit in the future.
To avoid these problems, set reminders on your phone so you don’t forget when payments are due. You can also use autopay features to automatically pay your bills before they are due.
Both of these options will help you reach this money goal before the year is over.
Refinance Your Debt
Interest rates for both mortgages and federal student loans hit record lows last year. This means now could be the right time to refinance your mortgage or student loan debt. Please note that refinancing your loan may impact your credit score.
Refinancing to a lower interest rate could save you thousands of dollars over time. But it’s important to note that you may incur fees when refinancing, as origination fees are not guaranteed with every lender/loan type.
For instance, the closing costs on a refinanced mortgage are typically between 2-6% of the loan amount. Keep this in mind when doing the math to determine if you can save money by refinancing.
Make it easier to save money every month by automating the process. For example, contact your bank and ask them to transfer a specific amount from your checking account to your savings account at the same time every month.
You can also ask your employer to deposit a certain percentage of your paycheck directly into your savings account every pay period.
If you automate this process, money will go straight into your savings account every month. It will never be in your checking account, which means you won’t be tempted to spend it instead of setting it aside.
Check Your Financial Accounts Regularly
Set a goal to review your financial accounts on a regular basis. This includes your checking, savings, credit cards, and all other types of financial accounts.
As you review your accounts, look for fraudulent charges that need to be disputed. Notify your bank or credit card company of these charges right away.
You should also make sure there is plenty of money in your checking account so you can avoid costly overdraft fees.
Regardless of your current financial state, it’s always wise to set money goals. Work toward one or more of these goals so you can improve your financial health by the end of this year.