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Setting Financial Goals for 2021

Posted by Daniel Azzoli on January 8, 2021
Setting financial goals for 2021

Why do so many of us look forward to the new year? Well, it’s a chance to turn a new page, refresh, and make plans for a successful year ahead. It might even be especially welcomed after a year like 2020. Maybe some of your plans and goals were derailed, or maybe things didn’t go quite as expected. Either way, 2021 holds the hope of a fresh start!

So, like most years, you might have a list of resolutions written out and ready to go. But while you’ve put this list together with every intention of sticking to it, for a lot of people, it’s normal for the boxes on a list of new years resolutions to go unchecked. The important question to ask is, why?

The truth is, when you strive for goals that are out of your scope or aren’t specific to your situation, the chances you succeed may be slim. This is true in all different realms of life, including your finances. Today, we’re going to go over some general but useful financial goals you may want to add to your list as we move into 2021, and then we’ll look at what you can do to tailor them to your situation.

1. Review Your Budget

When you close the books on another year, it’s a good idea to go over your budget and take a look at how you’ve spent your money. While you should be reviewing your finances regularly, you may gain a different perspective by zooming out and looking at the previous year in totality. This can help to inform you how you should be spending your money moving forward.

If you realize that you really don’t have a good idea of what you’re spending your money on, it might be smart to take a few steps back and set yourself the goal of making a budget in the first place. You can use a budgeting app to help you, or you can look into one of these budgeting guides to help you get started:

The key is to find a system that works for you. Having said that, putting together a budget is only one piece of the puzzle. Following through on your promise to stick to it is a whole other matter. You’ll need to exert some discipline and find creative ways to solve problems as you work out the kinks. A big part of this financial goal is putting both the creation of your budget and the follow-through together.

2. Make a List of Savings Goals

Do you have any major purchases you want to make this year, or even in the coming years? Whether you’re looking to save up for a vacation, a car, a home, or a plan for your retirement, you’ll need to make saving a part of your financial goals and come up with a savings plan to get you to where you need to be.

person typing up their financial goals on a typewriter

For example, let’s say you want to save up $2000 over the next year for a vacation. This means that you’ll need to set aside around $166 a month for the next twelve months to hit your goal. Break this down even further and that’s about $38 a week. Setting a goal and chopping it up into smaller portions may put things into more realistic terms and help you stay motivated throughout the year.

Once you’ve established what your savings goals are, you might want to consider opening up separate savings accounts for each goal. This can help to ensure that the money you save goes towards its intended purpose.

Create an Emergency Savings Funds

One of the most important financial goals to strive for is to put together an emergency fund (if you don’t already have one). An emergency fund is money set aside to help you handle an emergency expense. While you can apply for an installment loan or a line of credit when facing an emergency, these are typically considered a last resort. Your first line of defense should be your emergency fund. If you want to learn more about how to set one up, take a look at this guide.

3. Ramp Up Your Job Hunt

The reality of 2020 is that the world went through a lot of change, and for a lot of people, this may have affected their job security. Whether you lost your job, had your hours cut back, or are just looking to make a change for the better, improving your job situation is a great goal to have moving into 2021. Let’s take a look at a few ways you may be able to do this.

Polish Up Your Resume

If you’re about to start the job hunt, this is the ideal time to give your resume a thorough look-over. Do some research and get some tips on how to improve it, and make sure you tailor it for the types of jobs you’re looking to apply for. You may also want to consider working on your interview skills. This can be as simple as asking your friends or family to conduct a few mock interviews (whether virtually or in-person) to get you to be more comfortable with the type of questions you might face.

person making edits to their resume

Look for Seasonal Work

While there may not be a long-term career in it for you, looking for seasonal work can be a great way to boost your income for the short term while you look for something a little more permanent. And you might just luck out by finding that there may be room to grow at a particular workplace, or you might meet someone who can help you move on to bigger and better things. Regardless, earning some extra cash never hurts!

Improve Your Skillset

If you want to improve your career prospects, it helps to improve yourself first. You can go back to school, look to take free courses online in the area you’re looking to specialize in, or look for any opportunities available that may help you work on your skills.

Even if your work situation hasn’t changed over the course of the pandemic, you can still look for ways to improve your circumstances. Maybe you can apply for a new role within your company, ask for more money, or take on more responsibility to show your worth.

Gear Your Financial Goals Around Your Situation

While these might be useful financial goals to strive for, you won’t get much out of them if you’re calling it quits by March. So, how can you improve your chances of following through? You need to give yourself a chance for success right from the beginning by making sure these goals are geared towards your personal situation. Here are some things you can do to help you do that.

1. Set a Time Frame

We’ve touched on this a bit already, but the first thing you’ll need to do is be specific about where exactly you’re trying to go, and when you plan on getting there. You might have a loose plan of buying a car, but if you don’t know how much you’ll need and you don’t set yourself a specific end date, you won’t have a target to aim at. By outlining a specific timeline, you can calculate how much you’ll need to save each year, month, and week, and you can work these savings into your regular budget.

2. Set Realistic Goals

While the start of a new year can be an exciting prospect, it’s easy to get caught up in setting lofty goals for the year to come. There’s nothing wrong with dreaming big, until those big dreams start to seem outsized and get abandoned before things ever really get off the runway.

a dart in the middle of a dart baord

So, avoid setting yourself up for failure by setting realistic and achievable goals along with a simple plan to achieve them. It might be easier to make small changes in your life, so focus on these instead. After all, a small goal you set for yourself at the beginning of the year and that you actually achieve is going to have a lot more of an impact than a lofty goal that you abandon by February.

3. Gear Your Financial Goals Around Your Efforts

When you’re coming up with your financial goals, try to gear them towards what you can control versus the specific results you’re looking to achieve. Why make this distinction? Like 2020 has reinforced, there are plenty of things in life that are out of your control, and roadblocks can pop up without any warning. When things like this happen, you might have a harder time achieving certain outcomes you’ve set for yourself. But if your goals are centered around your personal efforts, it may make it easier to follow through. To continue with our car example, instead of saying that you’re going to have enough money to buy a particular car, instead focus your goal on the process of saving. Tell yourself, “I am going to put aside money every month to go towards a car down payment” instead of, “I will have X amount of dollars for a down payment by the end of the year.”

4. Measure Your Progress

Financial goals can be easier to achieve when you assign a number to them. When you have a specific number to aim at, things become easier to measure. But as we just went over, try to gear this number towards things you have control over. So, instead of saying that you’ll save $5000 by the end of the year, promise yourself that you’re going to put money towards your savings a certain number of weeks of the year. This way, your efforts are centered on something you have more control over while assigning a number to what you’re trying to achieve. It’s also a good way to see your progress throughout the year so that you’re encouraged to keep going.

Make the Most of the New Year!

Regardless of how difficult the last year may have been, the new year can hold the promise of self-improvement and success in different areas of life. And while you may go into it full of optimism and hope, you’ll still have your work cut out for you if you want to make 2021 a success.

When it comes to setting financial goals, the key is to gear them to your situation and make sure they’re focused on things you can control. Remember to stay patient, roll with the punches, and do your best to follow through. Good luck in the new year!

 

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see MoneyKey's Terms of Use.

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