financial goal written on notepad

9 Smart Financial New Year’s Goals for 2021

We will all remember 2020 as one of the most challenging and unpredictable years of our time. When the Covid-19 pandemic hit, it caught everyone off guard and disrupted the lives of millions of Americans. With massive job lay-offs, business closures, and social distancing rules, most people continue to experience financial problems even with help from the government.

Most of us have learned some very hard personal financial lessons, one of which is that the biggest financial blind spot for Americans stands at comprehending risk. The pandemic has taught us that relying on your paycheck is short-sighted, having an emergency fund should be a top priority, and budgeting can make a huge difference.

As we hop into 2021, we’re still uncertain of the future and hence need to start setting smarter financial goals to better prepare ourselves and make it the year we bounce back.

However, setting and achieving goals is no easy feat, and it requires discipline, sacrifice, and dedication. According to research, about 42% of people are likely to achieve their goals when they write them down, so creating a financial plan is a good place to start.

1. Start By Setting SMART Goals 

The basic role of setting smart financial New Year’s goals is by following the SMART goal system. SMART stands for Specific, Measurable, Attainable, Relevant, and Time-bound, which should be your aim when it comes to setting financial goals.

Essentially, this means that you should start by setting attainable goals that you know are realistic and manageable. You also need to have a time parameter for the goals to be effective, and you need to make them specific, so you know when and how to achieve them.

Having attainable goals means that they should be within reach. However, this does not necessarily mean that easier goals are more realistic. On the contrary, it’s imperative for you to set high goals that will motivate you to work harder and not remain in your comfort zone. Your new financial goals should be challenging but not too difficult that there’s a probable higher chance of failure.

When setting long-term goals, it’s important to have set sub-goals as milestones to avoid losing Focus. Research about your goals and the best way to achieve them, assess your starting point to ensure you’re in a position to start working on them, then find something that motivates you to reach them.

2. Invest In Financial Education

Financial literacy is an epic fail in America. This makes investing in financial education one of the best goals you can set for 2021. Personal Finance is not as easy as most people assume, and you’d be surprised to learn that many people are living from paycheck to paycheck and in a continual state of financial peril.

It’s important for you to expand your knowledge of money, budgeting, saving, and investing so you can do it wisely without losing sight of now and the future. This doesn’t necessarily mean that you need to hire a financial advisor (although that would be just as effective) as there are tons of online resources you can use to educate yourself.

3. Bulk Up On Your Emergency Account

In the coming year, the last thing you want is to be caught off guard again, and one of the best things you can have is an emergency fund with up to three to six months of living expenses. If there’s one thing that overwhelmingly true that you should know about money, it’s that the unexpected is inevitable, and it pays to be prepared.

Whether it’s another pandemic, a job loss, or an unexpected medical problem, without an emergency fund, you’re bound to dive deep into debt, and this could leave you with a long-term financial crisis. Decide how much you would like to have in your emergency account by the end of 2021, then work out how much you need to save each month to reach that goal.

4. Create a Budget That You Can Stick To

Having a budget is a good way to manage your money. It’ll help you set the right amount for all your expenses and how much should go into your savings and investments. There are many ways to keep a budget, and you can use budget spreadsheets, printables, or cash envelopes. Whatever you choose, make sure you can stick to it as it will help you focus on your finances.

5. Pay Off Your Debts

Paying of death comes with a certain financial freedom and opens up opportunities to set more goals that you can achieve when you don’t have to worry about creditors. Debts can take a toll on you due to the rising interest rates. In 2021, make a point to pay off or pay down your debts. Choose between the debt avalanche method, where you start off with the highest debts, or the debt snowball method, where you start off with the smallest debt.

6. Automate Your Finances

One of the easiest ways to meet your financial goals is by automating them. When you automate the process, different amounts of money will go from your payment account to various designated accounts immediately. This way, you won’t have a chance to change your mind about the amount or get tempted to use all the money for other things. Automate everything from your savings to your utility bills and loans.

7. Look for Ways to Increase Your Income

If there’s anything we have learned from 2020, it’s that life is uncertain, and having multiple streams of income can make a huge difference. Start a side hustle that will help you generate income, and it could be anything like freelance work online. Find something you can do while you still hold your job, or better, something that will eventually grow into a full-blown business, and you can finally leave your job.

8. Kick Expensive Habits to the Curb

Gambling, alcohol, tobacco, eating out, and the like are expensive habits that most people waste a lot of money on. It’s agreeable that they bring fun into our lives, but this is where you make sacrifices to have a better opportunity of meeting your financial goals.

9. Start Saving for Your Retirement and Investing

Investing is one of the best ways to build wealth, whether it’s real estate or the stock market. Invest in your retirement and save money into your retirement and children’s accounts, and get educated about other investment vehicles that will grow your money.

How to Set Financial Goals

Setting financial goals is deeper than writing down the things you want to achieve. They need to be SMART, and you should break them down into daily, weekly, and monthly actions that will help you stay focused. Track your progress, and if you feel like you may falter on the way, get accountability.

Now, if you need to settle some bills immediately before you start and could use a loan, get a cash loan from Kosters. Feel free to get in touch with us today, and we’ll be more than glad to assist you!

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