We are big fans of setting goals and find them instrumental to our success.
If you’re not sure what kind of goals to set, we will run through some simple financial goals that you will want to implement this year.
Let’s get started!
1) Fully Fund An Emergency Fund
An emergency fund is a stack of money that you have in case of emergencies.
How much money you put in your emergency fund is up to you, and should be whatever amount makes you feel most comfortable.
It is typically recommended that you start with $1000 or 3 months worth of expenses.
You want to be able to easily access your emergency fund, but we’d also advise you to keep it somewhere that you won’t dip into it.
A sale at Target is not an emergency! (Sadly).
Setting up savings funds for other things that you will need to pay for is a good idea, and try to leave your emergency fund alone until you need it.
An emergency fund is a good short term goal, which can have long term benefits.
We recommend opening an account with CIT Bank with their industry leading high interest rates.
2) Start a Simple Monthly Budget (Money Plan)
If you haven’t got a budget in place already, creating one will put you in the best possible position for 2021 and the future.
A lot of people think of a budget as restrictive, but it’s actually the opposite.
A budget isn’t just writing down your bills, but putting together a complete financial plan for your life. Learning how to manage your money is one of the best things that you can do.
You will start with writing down your bills of course, but then you will need to work out how much you are spending on your other expenses.
Look back through your bank statements and add up how much you have been spending in other areas, such as groceries and entertainment.
This will put together the fixed expenses and variable expenses of your budget.
You will then get your income and subtract the expenses above. The money that is left over should go towards your goals, such as paying off debt or savings.
3) Cut Expenses
This is a good next step to come to after creating your budget.
You will have a list of your expenses – both fixed and variable. You can go down the list and choose some expenses that you can cut.
You could start with your bills – shop around and see if you can find what you currently have for a lower price. Or maybe you could cancel some things that you don’t really need altogether.
When it comes to your variable expenses, it needs to be realistic. As outlined in the step above (creating your budget), these numbers come from what you are actually spending.
You may want to set yourself a little challenge – this could be something like picking 2 expenses per month to reduce.
Living a bit more of a frugal life can dramatically reduce your costs but still let you have a good time.
4) Start a Side Hustle
Money making side hustles are becoming more and more popular, as people realize that you can make a lot of money outside of your 9-5.
The side hustle that you choose will depend on what you enjoy, and how much time and money that you are able to put into it.
You may feel like you don’t have a lot of time to start up something new, but there are lots of students and moms who are starting up side hustles and getting big success.
Even if you don’t want to start something massive, it’s a good way of generating extra income that you can use towards your goals. Starting a side hustle and wanting to scale it up is a great long term goal.
You could start off with something small, such as surveys or babysitting. Or if you want to do something bigger, try dog walking or teaching English online.
5) Pay Off Debt Quickly
A major goal that you should concentrate on for 2021 is paying off your debt ASAP.
If you don’t have debt, great! Feel free to skip past this step.
With the total US consumer debt (that’s not including mortgages or student loans) at a figure of $13.86 trillion, there are a lot of Americans who are in debt.
There are many reasons for paying off debt, but we feel like the main one is that it holds you back.
What could you do with the money that you are currently putting towards your debt?
There are a couple of popular methods of paying off debt called the debt snowball method and the debt avalanche method. One focuses on paying off the debt with the highest interest rate first, and the other with tackling the smallest debt amount first.
6) Automate Your Savings
This is something that is essential to set up if you are someone who struggles with saving.
The best thing about setting up automated savings is that you don’t have to think about it. Often, thinking about whether we should move money to savings or not ends in us not taking action.
Set up an automatic savings transfer with your bank that happens right after getting paid, so you are used to the money not being there to spend.
7) Save For Retirement
This is definitely an important goal for 2021. It’s one of those goals that you think “ah…retirement is ages away, I have time!” – and then you look at some math and you quickly change your tune.
Before you even start saving for retirement, we recommend that you go onto a retirement calculator and fiddle about with some numbers.
When you start looking at how much you need to save each month to retire by a certain date, saving for retirement suddenly becomes a whole lot more exciting!
Aiming for early retirement is a good goal to have too, as you don’t know what will happen in the future. Even if you decide you want to carry on working, it will bring peace of mind to know you have the cash there.
A good first step is to max out your 401k and go from there.
8) Get Super Organized
This may sound like a bit of an odd goal to include on this list, but all of the steps in this article are basically this – get organized.
Ideally, you want to get organized in all areas of your life, but your finances are a good place to start.
Set your bills up on auto-pay, get your savings automated, keep your documents stored nicely, and you will be setting yourself up for success.
9) Read More Personal Finance Books
A common habit of highly successful people is to read a lot of books.
There are some popular personal finance books out there that will get you started on the right foot.
If you are on the step of paying off your debt, a good book to start with is The Total Money Makeover by Dave Ramsey.
10) Protect You and Your Family
Regardless of any other goals that you have for yourself, protecting your family should be of vital importance.
Have Life Insurance
Make sure that you have adequate life insurance so that your family will be ok upon your passing.
Haven life insurance is a great option to try. Make sure that you are honest with everything on there and are completely covered.
Grab the Emergency Binder that has everything in one place for when there is an emergency.
If something happens to you, you will want to make sure that it is not stressful for your family.
This is where you would find your accounts, your life insurance information, where your will is, etc.
Some other things that you could include in your emergency binder include:
- Emergency contacts and important phone numbers
- Copies of important documents
- Medical information
- Insurance documents
- Legal documents
- Evacuation checklist
- Emergency plan
Money can be used as a tool to ensure that you and your family live a safe, happy life.
Ignoring your finances only leads to stress and worry. If you are organized and have a plan, these goals will be easy to reach.
By following a plan and having good goals, you could even reach early retirement, or do the things that you’ve always dreamed of doing, such as traveling the world or buying your dream home.